Troubled telecoms group Smart proposes to cut further jobs and sell three of its businesses in a radical plan to save the company.
Smart released figures yesterday showing that it lost almost €36 million in the first six months of the year, more than three times the €11.2 million deficit it reported from the same period in 2005.
The group, which is depending on key shareholders for the €2.5 million to €3 million a month it needs to keep trading, has completed a review of its operations.
As a result of this, it plans to focus on its residential and corporate broadband business, a move that will result in its workforce dropping to 100 from 348 at the end of August.
Since then it has let go more than 100 people, including a sales team that it recruited earlier this year. Its current payroll numbers slightly more than 200.
The company plans to sell its payphone, pre-paid call card and wholesale line rental (WLR) businesses.
Its WLR operation has more than 50,000 subscribers. It consists of Smart renting lines from Eircom at wholesale rates and selling voice services to customers at a margin.
Smart yesterday described these businesses as "low margin". At its annual general meeting two weeks ago, the board indicated that they offered little scope for growth.
The sale of these businesses and further lay-offs will cut Smart's workforce to 100.
It also announced yesterday that 20 per cent-shareholder, Brendan Murtagh, has agreed to loan it €2.4 million at 6 per cent a year for six months. The money will be used as working capital.
As security for the loan, Smart is giving Mr Murtagh a charge over its 10 per cent holding in Broad Band Communications Ltd (BBCL), and its option to buy the remaining 90 per cent of the company. Mr Murtagh's sons, Alan and Fergal, own 30 per cent of BBCL.
BBCL owns a broadband fibre network in Dublin. Its assets amount to €6.6 million and it has liabilities of €845,000. Smart's option allows it to buy the 90 per cent stake for €9.1 million by the end of this year or €10.5 million up to December 31st 2007.
Mr Murtagh is one of a small number of backers that have been providing the company with cash to cover day-to-day costs. The others are understood to be former AIB chairman, Lochlann Quinn and Glen Dimplex principal, Martin Naughton.
At its annual meeting, Smart said that it was going through €2.5-€3 million a month.
In its statement yesterday, the company said that cutting the rate at which it is going through cash was a key aim of its rescue plan.
Smart's half-year results show that sales in the six months to the end of June dropped more than 12 per cent to €20.3 million from €23.7 million during the same period last year.
The business lost €35 million during the six-month period compared with €10.4 million last year.
Its pretax loss in the first half of this year was €35.9 million, compared with €11.2 million in the six months to the end of June 2005. Losses per share jumped by 50 per cent to nine cent a share from 6 cent a share.
It balance sheet shows that at the end of June it had liabilities of €13.5 million, while net assets were €3.3 million.
According to its cashflow statement, the net cost of its operations was €24.1 million. Net debt at the end of June stood at €14.4 million.
Smart has hired Hugh Cooney of BDO Simpson Xavier to manage its financial restructuring. Executive directors Paul Sullivan and Maria Pearl Roche, and non-executive director, Ken Barry, are resigning from the board.
