Misco Group Ltd is holding eleventh-hour talks to secure additional funding to turn around the business and stave off the threat of administrative receivership, multiple sources have told The Reg.
The majority of Misco’s European operations were sold to IT industry exec Alan Cantwell backed by Hilco Capital – the private equity business that rescued HMV and Staples (rebranded Office Outlet) – in March for an undisclosed sum, believed to be £1. Hilco is understood to not be a parent guarantor.
Sources: Misco sold to Hilco Capital, care home for the distressedREAD MORE
The previous owner, Systemax – which held on to the largest and most profitable operation in the Misco group, in France – had endeavoured to turn around the loss-making operation in prior years but gave up the fight. Systemax also ditched its technology supplier businesses in North America: there just isn’t the same level of profit to be had from box-shifting these days.
Misco employs a little more than 1,000 across Europe including around 300 plus in the UK. In 2016, the Misco businesses, excluding France, turned over $542.7m compared to $670.2m in the prior year. Operating losses, including France, were $1.9m, versus $2.6m in 2015.
Cantwell, who was made CEO, then subsequently closed the Watford sales office in April, making some 18 staff redundant and by August confirmed he was also bringing down the shutters on its warehouse and distribution centre based in Greenock, Scotland.
Despite this cost-cutting activity, a number of sources have claimed that Misco has gone through its cash pile and is running dry as the management team attempt to build a business based in "solutions" and tech services – no easy achievement.
One insider said Cantwell was “trying to broker a last minute deal today”, adding there was a “very real risk of [Misco] going into administration”. Staff are understandably on tenterhooks, we were told.
Contacts in the credit industry told us that credit insurers – the lifeblood of the supply chain – had either “pulled out” or “reduced [the line] to a very low level”. This will undoubtedly have hit cashflow.
Some distributors will only deal on a cash basis with a company whose credit rating is poor. In the case of Misco UK, we are told two of the major distributors, which we will not name, had backed the business.
Misco told The Register it was unavailable to comment today. ®