Getronics debt problems leave customers concerned

Efforts by Getronics, one of Europe's largest IT services companies, to restructure its finances are causing concern among...

Efforts by Getronics, one of Europe's largest IT services companies, to restructure its finances are causing concern among existing customers and costing the firm new deals.

Getronics said customers had been asking questions about its future since it announced a second round of job cuts last November, reduce its cost base to further.

Getronics problems worsened this week when it failed to persuade bondholders to back a life-saving debt swap.

The swap, announced on 10 January, was intended to reduce the company's almost £294m in net debt to between £65m and £78m. However, only 24.5% of bonds were tendered by the Wednesday (29 January) deadline. Getronics will present a new offer on or before 5 February.

Getronics chairman and chief executive officer Peter van Voorst said the changing of bonds into shares "will remove market uncertainties and take away any doubt that may exist about the financial solidity" of Getronics. The company amassed much of its debt when it bought US rival Wang Global in 1999.

No major customers have abandoned Getronics, a company spokesman said. However, it does cost Getronics management "a lot of time to explain to customers what the financial state of the company is" and Getronics is being passed over by potential new customers.

Hollandse Beton Group, which last August signed a three-year, £8.5m outsourcing agreement with Getronics for 5,000 workstations in the Netherlands and Germany, said it continues to work with the Dutch IT services company.

"We have a contract with Getronics and are working on the execution of that contract," said a spokesman. "Getronics is informing us well about their financial situation."

Getronics customers should prepare contingency plans in case the company cannot overcome its financial troubles, said Andrew Parker, a senior analyst at Forrester Research.

"The chief information officers of organisations that buy services from Getronics should at least keep their eyes open and be aware of any disaster recovery steps they may have to take in case Getronics collapses.

"I am convinced that organisations that are looking to create new relationships with IT services companies will push Getronics down on their lists."

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