Destra struggling for survival

Digital media and marketing firm Destra has suspended trade in its shares and is in desperate talks with its bankers and potential buyers of its assets.

Digital media and marketing firm Destra has suspended trade in its shares and is in desperate talks with its bankers and potential buyers of its assets.

The news comes after reports in The Australian Financial Review that the company’s banker St George Bank was preparing to call in receivers. Insolvency firm KordaMentha has been working on behalf of St George for the past month.

According to the report, Destra’s failure to sell its Magna Pacific DVD business – one of the group’s few profitable divisions – was expected to trigger the appointment of KordaMentha as receivers as early as today.

But Destra’s executive chairman David Gordon says talks are continuing to rescue the company.

“Given the continuing deteriorating economic environment, the board has expedited urgent discussions with its bank to determine the best course of action in the interest of all stakeholders. The company is also in discussions with trade buyers for various of its assets,” Gordon said in statement.

“It is not possible at present to give an indication of the expected outcome or timing of those discussions.”

Destra is controlled by Prime Media Group, which is majority owned by billionaire Paul Ramsay. Prime increased its stake in Destra from 19.6% to 44% in April.

The chief executive and founder Dominic Carosa then stepped down from the company after Prime installed Gordon, who is from consultancy Lexicon Partners, as the company’s executive chairman and launched a detailed review of the business.

But in an ironic twist, Carosa could emerge as a buyer for some of Destra’s assets. Carosa, who has started an internet investment company called Dominet, recently purchased Destra’s mp3.com.au for an undisclosed price.

Carosa said this morning that he would not comment on Destra’s current plight, except to say that he “wished the current management well”.

But he says he is keeping a “watching brief” over Destra as part of his wider hunt for acquisitions.

“We’re having active discussions with many media companies that are looking to dispose of assets,” Carosa says.

In late October, Destra announced that Prime Media had given the company a $2.2 million loan facility “to meet short-term cashflow requirements”.

Destra announced a net loss for 2007-08 of $76.9 million, including $69.5 million of writedowns. According to the Destra annual report, Lexicon received $350,000 for consulting services during 2007-08.

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