ASX-listed voice-and-data vendor Tennyson Networks has entered voluntary administration after cash advances as part of a promised $9.8 million capital raising failed to eventuate.
The Tennyson group had entered into a $9.8 million deal with Neoside Pty Ltd, a technology company run by Melbourne accountant John Fletcher and businessman Geoffrey Rubython, on 8 August 2003, but Tennyson alleged in a statement to the ASX on 14 October that Neoside 'failed' to provide cash advances as agreed in a facility agreement for the deal.
Neoside has claimed it will 'complete its financing arrangements' for the facility agreement and associated share subscription agreement by 31 October and 'be in a position to rectify its default' but Tennyson's directors have decided to go ahead and appoint an administrator in the meantime.
'Nevertheless, in view of Neoside's failure to provide funds and having considered Tennyson's current financial position, the directors have formed the view that the appointment of a voluntary administrator is required,' Tennyson company secretary Rick Pullia said in a statement to the ASX.
Nicholas Brooke and Geoffrey Totterdall of PricewaterhouseCoopers were appointed joint and several administrators of the Tennyson Group on 14 October. Tennyson securities have ceased trading on the ASX as a result.
Pullia claimed that Tennyson will emerge from voluntary administration once Neoside fulfilled its obligations to the company. A general meeting of shareholders 31 October to approve the Neoside deal will go ahead as planned, he said in his letter to the ASX.
Neoside was to take 70 percent of Tennyson in the deal, expected to fund Tennyson's flagship Smart Office eXchange (SOX) business and broadband expansion via Datareach - a former broadband division of Ericsson New Zealand which Tennyson bought from Ericsson for $1.4 million early this year.
On 1 October, Tennyson had proposed a name change to Fusia Technology Ltd as a result of the Neoside deal. 'Tennyson is in the process of undergoing change, both in its proposed ownership structure and the scope of its product offering. It has acquired additional technology and products through the Datareach acquisition and has plans to further develop SOX,' company chairman Harvey Parker said at the time.
Previously, Tennyson had planned to sell SOX outright to Neoside, but decided against that option as negotiations between the two companies proceeded.
Tennyson Networks made a $4.9 million loss on $2.5 million in revenue in the financial year ending 30 June 2002. Figures for the year ending 30 June 2003 were not yet available.
The company's portfolio is distributed in Australia, the UK, New Zealand, Korea and South Africa. Tennyson claims that SOX products have been sold in 22 countries.
Several telephone calls to Tennyson's head office in Melbourne for further detail were made but rang out. Emails to company executives had not been answered at the time of going to press.