SecureData in debt before DiData buyout

Storage reseller and service provider SecureData Group - bought late November by integrator DiData for around $1 million -- was up for sale due to serious financial difficulties, a former executive of the storage specialist has revealed.

Evan Penn, newly appointed national business development manager at Dimension Data and former managing director of SecureData Group, confirmed the company had been seeking a buyer for some months as a way out of fiscal trouble.

"The company couldn't survive going forward in a trading capacity but had a lot of intellectual property and skills and a customer base," Penn said.

"From DiData's point of view, they can maintain that customer base."

Penn said he could not reveal the total amount of debts and liabilities owed to its business partners, which included Hitachi Data Systems, Veritas, EMC and Network Appliance.

SecureData's speciality -- storage -- has been tipped as a hot seller for 2005, but some commentators believe the channel will continue to consolidate.

Penn confirmed that "marketplace conditions" had put increasing pressure on SecureData. The only way out was to find a buyer or enter administration, dashing forever the company's ambitions to float and eventually achieve enterprise status, he said.

However, Dimension Data had not taken on SecureData's debts, Penn added.

As a result, an administrator was appointed to the shell of SecureData Group Pty Limited on 3 December, Australian Securities and Investments Commission (ASIC) documents reveal.

Martin Aungle, communications manager at DiData, confirmed the integrator had only bought the assets of SecureData. "We didn't buy SecureData Group in its entirety. We didn't take on its liabilities," he said.

Dimension Data also got SecureData Group's 51 percent share in New Zealand-based SQL Services as part of the deal.

About half SecureData Group's current 40 staff would be offered roles at Dimension Data.

Dimension Data Australia recently announced operating profits of $19.6 million on revenue of $674 million for the 2003-04 financial year.