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PC vendor in MBO rumour as court keeps out the creditors

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PC vendor Olivetti Computers Worldwide is heading for a management buyout following an application for court protection against creditors. Sources close to the troubled Italian computer group told The Register it is in serious financial strife and has applied for court protection to keep creditors at bay. The proposed MBO is understood to have the support of Olidata, Olivetti’s close rival in Italy. Olivetti Group sold its PC, server and notebook arm to Piedmont International, an industrial holding organisation, in January 1997. Last year Olivetti dragged its way back to profit after six years in the red. However, according to today’s PC Dealer magazine rising debts are believed to have forced the vendor into discussions of a management buyout,. The article stated that an emergency shareholders’ meeting took place last week, where it was decided Olivetti would remain under court protection for up to three months. It added that the PC group was believed to owe Olivetti Group L88 billion. An MBO would lead to management controlling 55 per cent of the company, with Far East partner Chaplet controlling 10 per cent. A five-band consortium will provide L130 billion for the buy-out. It was also understood former holding company Olivetti Group would invest L50 billion and write off the L88 billion debt. A source within the UK distribution channel said: "Olivetti is a stronger brand in parts of Europe than in the UK. As a result, Olivetti doesn’t have the big brand awareness to go up against the likes of IBM and Compaq over here." The source added that there had been speculation of an MBO since the company made the split with its telecomms and printer business. Olivetti was unavailable for comment. ®

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