Vultures circle crash-landed UK giant 2e2 after top brass axed
Lay-offs signal break up, insiders claim
The vultures are circling fallen channel giant 2e2 with an asset sale expected for the UK biz in light of the hefty redundancies made yesterday.
As reported yesterday, debt-saddled 2e2 Group laid off 22 per cent, or 319, of its 1,442 workers in Blighty, and placed ten UK subsidiaries into administration.
The Channel can today reveal that a raft of senior execs were among those made redundant. Company insiders said CEO Terry Burt, CFO Simon Burt, COOs Mark McVeigh and Maggy McClelland - the latter of whom only joined weeks ago - and CTO Nathan Marke were all axed.
Cuts were made across the entire UK operation in Reading, Newbury, London, Gateshead and Edinburgh. Solutions specialists; practice, bid and business development managers; technical consultants; and project bods will exit the troubled business.
Back-office staff were also hit including those in accounts and facilities, plus half a dozen receptionists and a number of IT support engineers and warehouse supervisors.
Simon Granger, joint-administrator at FTI Consulting, did not comment on specific individuals but confirmed the blood letting.
"These redundancies were made across various parts of the UK business in order to reduce the cost base as a consequence of the recent deterioration in trading," FTI told The Channel.
Sources said the job cuts pointed to FTI's intention to flog the assets of 2e2 piecemeal. One added: "If FTI thought it could sell 2e2 as a going concern it would have kept those people on."
Our insiders at 2e2 reckon that staff let go yesterday will not be paid for January, and this may extend to any business expenses incurred during that month.
Following its appointment as administrator on Monday, FTI effectively put up a "for sale" sign outside what 2e2 calls its international subsidiaries - these are Morse reseller businesses in Spain and Ireland, and 2e2's operation in the Channel Islands where it has few rivals.
In 2011 these overseas businesses turned over £95m, up from £75.4m the previous year. These firms are not in administration, so a bidder needs to buy the shares and the contingent liabilities that come with the companies, but they can remain standalone operations before integration.
Any buyer for the individual UK subsidiaries will not have to take on the group's liabilities - including pensions and the massive long-term debts of £270m - but on the flip side there are commitments and risk associated with any deal, suggest sources.
"If you buy the assets, you have to integrate them from day one, you have to transfer the staff and the customer contracts," said a contact.
"But customers often will say, 'OK I'll transfer but what is in it for me?' There is a danger of losing staff, disrupting the business and putting customers at risk."
FTI, which is expected to start the due diligence process today with potential bidders, confirmed it has been contacted by numerous firms.
"Significant interest has been expressed by third parties in acquiring the business and we are currently exploring a number of options," said joint-administrator Granger.
Industry speculation is that SCC, Computacenter, and Peter Dubens (chairman of Daisy Group and boss of Oakley Private Capital) are among those interested in the assets of 2e2 - which jumped the tracks this month after it failed to renegotiate a refinancing package.
"It will be a feeding frenzy, a car boot sale," said one person close to 2e2. "It'll be take what you want and show me the money. FTI's ambition is to get this done and dusted by Friday."
This timeline was described as "a bit fanciful" by another senior channel contact, and the process could take longer to complete, especially if bidding heats up.
The impact of 2e2's crash landing will be felt far and wide across the IT distribution channel as the debts racked up by 2e2 amount to tens of millions of pounds - the biggest insolvency ever in the reseller-cum-integrator sector. ®