Telecoms group Smart is to cut up to 100 jobs - one-third of its workforce - in the first stage of a rescue bid for the troubled company.
A review of its business undertaken by NCB Corporate Finance is almost complete and it is understood that the first phase of a proposed rescue plan will involve cutting around one in three of its 300-strong workforce.
The job cuts are "imminent" and it is thought that sales staff are likely to bear the brunt of the payroll reductions, although other divisions will also be hit.
The company is spending €2.5 million - €3 million a month to stay in business. Last week, it said it had run out of cash and was relying on its shareholders to provide it with working capital.
Smart's shares plunged on the news. However, they recovered ground on London's Alternative Investment Market (AIM) yesterday, closing at 3.75 pence (€0.055) from an opening quote of 3.29 pence, after over nine million units were traded. Kingspan founder Brendan Murtagh holds 20 per cent of the group, and is known to be providing it with cash.
Two other backers, former AIB chairman Lochlann Quinn and Glen Dimplex principal Martin Naughton, are supporting the company along with Mr Murtagh.
Last year, Mr Quinn and Mr Naughton agreed to provide funding for the development of Smart's broadband business through a special purpose vehicle which means that they are not direct shareholders in the group.
Smart has 16,500 broadband customers and is operating through 34 telephone exchanges around the country, as well as a number of metropolitan area networks (MANs), built by the Government in an effort to develop broadband coverage.
Last week, chief operations officer, Ciarán Casey, indicated that the group was going to use this as a base to develop its business. He said that the exchanges to which the company had access reached a total of 600,000 customers.
Smart moved into broadband in 2005 with the aim of capturing 64,000 customers by the end of this year. However, delays in opening up Eircom exchanges to competitors has slowed this process down, and as a result the company has only managed to reach 25 per cent of its target.
It hired NCB to carry out a review of the business with the aim of raising the cash it needs to stay in business in the long term. Industry sources speculated last week that it could be sold.
The review is in its final stages. It is understood that the consultants believe that the business is viable and can be rescued.
Smart announced last week that its chief executive and founder, Oisín Fanning, has resigned for personal reasons.
The group is also awaiting the outcome of a High Court case it took earlier this year against communications regulator, ComReg.
The regulator offered it a third-generation (3G) licence last November. However, it withdrew the offer in February in a row over financial guarantees that Smart was to provide as a condition of getting the licence.
Smart challenged the decision saying that it provided ComReg with the bonds that it sought. Mr Justice Peter Kelly heard the case in the High Court's commercial division last July. He is expected to deliver his verdict at some stage in the next law term, which begins in October.
