Horizon Technology has moved to boost its ailing balance sheet by disposing of a loss-making training business for €12 million. Cisco Training is to be sold, pending shareholder approval, to British IT solutions group Azlan which will take over the company's operations in four European countries. A small Irish division is to be retained by Horizon for competitive reasons, and is set to be integrated with related company Sun Training.
The deal has been agreed on a debt-free basis, with €1.1 million of the purchase price to be retained for one year, pending completion of warranties.
Horizon chief financial officer Mr Cathal O'Caoimh said yesterday that the sale would bring welcome cash back into the company's coffers, while also enabling it to dispose of a non-core drag on revenues. Between July and December last year, Cisco Training lost €900,000, Mr O'Caoimh said. He added that the price achieved for the operation reflected the market strength that Azlan would now enjoy in the training sector.
Horizon has also announced that it is to amend a key aspect of a 2000 agreement to purchase Irish e-business company Client Solutions. The company's vendors are to waive most of their entitlement to Horizon shares in return for a cash payment. Originally, €7.6 million of a €12.7 million overall consideration was to be paid in shares between June this year and September 2003. Instead, almost €2.5 million in cash is to be paid at the start of July this year, with a further €583,000 in shares issued between now and September 2003. A performance-related cash payment of up to €350,000 is to be made in June next year.
Mr O'Caoimh yesterday described the restructuring of the deal as "very significant", since the existing arrangement may have resulted in Horizon issuing its shares at "too cheap a price".
He said he expected the market to welcome the development since it would allay concerns about the company's share price that might be associated with a large share issuance. Horizon stock closed yesterday unchanged at €0.30, a long way from its 1999 flotation price of €1.64 per share.
Mr O'Caoimh said the two transactions should help Horizon to "draw a line in the sand" after 15 months of financial difficulties.
Once the Cisco Training sale has been completed, Horizon will employ 300 people, down from the 720 on the payroll at the company's peak last year. No further divestments are to be expected in the short term, according to Mr O'Caoimh.
"What these two transactions do is eliminate any questions as to whether Horizon will survive or not. The cash generated means Horizon is there for the long term," he said.
Technology analyst Ms Bernie Lardner of Davy Stockbrokers said the deals would leave Horizon in a position to address worryingly high debt levels while concentrating on core activities.
