Collapsed IT company attracts strong interest from potential buyers

Administrators have reported solid preliminary interest in the collapsed listed IT company Arasor International.

Stephen Dixon, partner at BDO, told SmartCompany this morning that while it was early days, there had already been expressions of interest in recapitalising the company since BDO was appointed administrator late last week.

Dixon says the primary problem for the developer of integrated optoelectronic and wireless solutions was that it never had a trading business, and had effectively used the $80 million it had raised to fund product development.

A first meeting of creditors – which are mostly offshore, with the largest understood to be a venture capital company – will be held on May 27.

Dixon expects the second meeting, to be held 35 days after BDO’s appointment, to deliver options for shareholders and creditors, with five parties already expressing interest despite an absence of advertising.

He declined to comment on the identity of the interested parties or the nature of the recapitalisation plans.

Dixon says Arasor had about 4,500 shareholders, many of whom were retail investors.

The appointment of BDO follows a rocky road for the Melbourne-based company.

A notice from its AGM in February detailed subsidiaries in administration, legal action to recover trade receivables, and asset swaps.

“The board recognises that the company’s cash position is low and has taken all commercially reasonable actions to reduce expenses,” it said at the time.

It warned the company would not have sufficient cash to continue in the near feature, and said it was trying to negotiate a recapitalisation or allow another company to do a backdoor listing.

Its chief executive, Wiliam Mackenzie, did not renew his contract at the end of last year.

While a meeting on May 16 resolved that the company should not be wound up, a day later the company’s directors – Reginald Bancroft, Edward Li and George Sycip – resolved to appoint voluntary administrators.

A plan to delist Arasor was withdrawn in February, with directors saying that “as a result of the progress that the company is making regarding a settlement in relation to its debt and guarantee obligations, and interest shown by third parties in selling their business to the company” they considered there was “some prospect” of restoring value to shareholders.

“While there are still a number of issues to resolve, sufficient progress has been made for the directors, for the time being, to withdraw the resolution to delist the company from the ASX,” the company said on February 24.