Troubled software maker iSoft is now considering a sale, according to chairman Robert Moran, as the company looks to restructure its entire business and repay its debt after recording a $383 million loss this year.
The announcement comes after the company’s shares have plummeted over 90% during the past year, with Moran saying the company was too slow to move with market trends and was carrying too much debt at $240 million.
The company’s troubles haven’t stopped, either, with the firm recently announcing that the maturity of $133 million in debt had been brought forward by over a year to 2012, due to the firm’s failure to meet incentives proposed by its banks.
Moran said that selling the company was “one of the options” when prompted by one shareholder. But he also said, in response to a note that shares were now trading at 7.8c that “the reason I think probably all of us here is because we think it’s worth more than 7c”.
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The company is now working with UBS to pay down debt and conduct a massive restructure of the business. Moran outlined a number of different factors for the company’s demise.
“We failed to achieve the growth levels we had planned in many of our key markets,” Moran said yesterday.
“To a large extent, this was due to the impact of the global financial crisis on Government budgets across continental Europe and the UK and to a lesser extent in other economies,” he said.
“Secondly, we were too slow to react to the changed economic environment and did not rein in expenditure… I acknowledge on behalf of the board the distress that this has caused to all involved and the impact on our share price speaks for itself.”
Moran also said the company was too exposed to Britain and Europe, where more than two thirds of its revenue comes from, and that the appreciation of the dollar had a “significant effect” on results.
But he also said he did not have an answer as to how the company could reduce its debt. “At this stage I don’t have an answer to exactly how that will happen,” he said.
Newly appointed chief executive Andrea Fiumicelli said the company is seeking $30 million in cost savings for 2011.
“On the revenue side, management entered 2011 knowing that we were beginning the year with lower contracted revenues than 2010 due to contracted declines in the National Programme and several contracts ending in the Netherlands.”
But despite the company’s supposed optimism, there will be some board changes. Moran is stepping down to enable the appointment of an independent chairman due to his involvement with majority shareholder Oceania Capital Partners, and directors Anthony Sherlock, Claire Jackson and Peter Wise are set to leave the company.
But Moran was quick to say the directors weren’t abandoning ship, saying that iSoft is still “a great company operating at the cutting edge of the eHealth industry”.
However, he also said the company would be unable to provide any guidance to the company’s restructuring. Revenue is forecast to be about the same as 2010, at $400 million.