3/19/2009 12:30:00 PM
Administrators appointed as Advantage set to go under
Advantage Cellular has appointed an insolvency practitioner ahead of putting the business into administration today (Thursday 19 March).
The move appears to be pushed as sales have dried up and the distributor’s Polish backer Roman Karkosik has pulled his investment in the business.
Advantage’s biggest airtime partner, 3, has been informed, and is now looking to redirect its dealers to other distributors. Advantage connected between 3,000 and 5,000 connections per month on 3, via around 40 dealers.
One snag that could prevent the distributor's imminent push into administration is the complex shareholding in the business, and the ongoing presence of former chairman and CEO Simon Earle (pictured, above left) as a large shareholder.
Earle quit his role in the business in August 2008 amid a fall-out with Karkosik (pictured, above right), over failure to invest in the proposed Extreme virtual network business. A buy-out of shares belonging to either Karkosik or Earle could save the business.
Earle continues to hold 20% of Xebera, Advantage’s holding company, which itself owns 61% of Advantage. The remaining 39% of Advantage is held by Earle.
Although Earle technically has an aggregated majority share in the distributor, because of his smaller share in Xebera, he would be out-voted by the Polish directors on the Xebera board.
Sources at Advantage said staff were advised last Friday to go home by directors John McFarnon and David Whittaker. Sources also stressed that they were paid last month, and are awaiting pay for this month. Dealers were paid up, excluding last Friday.
There is a small possibility for a deal where either Earle or Karkosik’s shareholding could be bought out and the business allowed to continue.
Earle is expected to challenge the push into administration without consultation and is understood to be currently talking to lawyers.
It remains unlikely that the business can continue in its current form, given the lack of appetite of its current investors.
One source indicated potential interest from IT distributors in taking on some of the assets. The distributor's commissions systems are rated by those close to the company, and it also holds premises obtained from the Williams racing team in Didcot, since it was first set up in September 2007.