Plasmon UK goes into administration
Redundancies en route to a takeover
Plasmon has placed its UK and Europe operation in administration as it negotiates with an investor who it hopes will refinance and take over its core archive business.
Plasmon has said that staff from Kroll's Corporate Advisory and Restructuring Group were appointed as Joint Administrators on Monday, 6 October.
There are, in effect, two parts of Plasmon: Plasmon Inc, the US operation, which a subsidiary of Plasmon Ltd, the original UK operation. There are several business units involved in Plasmon Ltd., for example in CD and DVD mastering in France, and in UDO media research in Cambridge.
A person familiar with the situation said that about a third of Plasmon Ltd's staff were made redundant. The software and UDO media teams have been hardest hit. They were judged unimportant compared to the core archive business, and are being closed down during ongoing negotiations with the (presumably) US firm interested in taking over the parts of Plasmon it wants.
Plasmon's statement said the Administrators: "are continuing to trade the Company's UK and European sales and marketing division alongside the continuing operation of the Company's US subsidiary, Plasmon Inc. This enables the ongoing sale and support of Plasmon products worldwide whilst a going concern sale of the business is explored. The Administrators are presently in discussions with a number of interested parties and are hopeful that a sale of the remaining business can be achieved in a relatively short time frame."
This sounds like the Administrators are in control but, in essence, its Plasmon CEO Steve Murphy's team who are doing the negotiations with the, potential investor and telling the administrators what they can and can't use from Plasmon Ltd, the overall parent company. The prospects of the administrators realising any value at all from the unwanted parts of the business are remote.
They in fact believe that there is unlikely to be any value realised at all for Plasmon shareholders. That means Hanover Investment Partners, Amvescap and the other investors have lost their shirts as the US investor gets the core archiving business for nothing, except a large slug of funding needed for product development and working capital, thought to be in the $20 million area.
Investors losing out include BT Pension Scheme Trustees and Royal Mail Pensions Trustees, which will be unwelcome news for their pensioners and savers.
Another person close to events says the administration process is not surprising, it just being part of the process by which a viable Plasmon archiving business can be created. This process could even complete in just a few days time.
Plasmon's own UDO optical media format's generational roadmap may now be limited in scope if UDO media research is disbanded.
According to sources, the remaining Plasmon Ltd. staff are clinging on from week to week waiting to see if they will be needed in the new Plasmon.
Watching a viable business trying to emerge from amidst the ravaged remains of an old one under the pressure of dramatic financial events is not a pretty sight. It is amazing, reassuring even, that rescue and refinancing talks are ongoing at all. ®