MOBILE PHONE retail chain 3G was wound up yesterday and a bank has taken control of its shareholder Sigma Telecom after the troubled business failed to find a rescuer.
The mobile phone and wireless equipment retailer closed “temporarily” last week as its management continued the search for new investors to rescue the business.
Sigma Telecom has lost one of its biggest customers, Meteor, for which it distributed mobile phones and other equipment. The network’s parent, Eircom, said last night that Meteor has appointed RCI Radius as its new distributor.
3G’s chief executive, Tony Boyle, announced yesterday that he and his fellow directors had no choice but to put the chain into voluntary liquidation. The move means the permanent loss of 150 jobs.
At the same time, Mr Boyle said that it had invited Ulster Bank to appoint a receiver to Sigma Telecom Ltd, a shareholder in 3G and a major creditor of the mobile phone seller. The bank appointed Tom Kavanagh of insolvency specialists Kavanagh Fennell yesterday.
Mr Boyle stressed that his other business, Sigma Wireless Communications, which provides equipment to the emergency services and some large organisations, has not been affected and is trading as normal.
It is also understood that the directors believe that Sigma Telecom, or a large part of that business, can be saved, even though it has lost a key customer. That company employs 120 people.
As well as supplying Meteor, Sigma Telecom provided the phones sold in the 3G shops. It also guaranteed leases held by the retailer, meaning it could be liable if 3G defaulted on rent or other obligations.
The leases are understood to be the main reason 3G is in trouble. Its outlets are in a range of high-profile locations, such as Henry Street, Dundrum shopping centre and the Stephen’s Green centre in Dublin, Merchants Quay in Cork, Shop Street in Galway and other high-profile retail areas.
Renting premises in key high-street and shopping centre locations was expensive in the Republic up to recently, which means that leases dating back two or three years or further are subject to rents agreed at or near the property boom’s peak.
An added difficulty is that the law prevents rents being cut in any reviews of many of these agreements. New legislation changed that position last year, but it only applies to leases taken out after the law came into force.
3G’s management was looking at the option of putting the business into examinership earlier this week. This would have given it court protection from its creditors and possibly allowed it to exit or renegotiate the terms of its leases.
Mr Boyle said yesterday that 3G had been told just before Christmas that an investor with whom the company had been in talks had decided not to go ahead with the deal.
“However, we continued to work hard to secure an alternative, which did not prove possible,” he said.
“The result of extremely high rents and inflexible leases, at a time of adverse economic conditions, made this move unavoidable.”
