Inside the world of business
No end in sight for Conlon firm Xsil's legal woes
PETER CONLON’S once high-flying tech firm Xsil escaped a winding-up petition in the High Court yesterday after it reached a settlement with former staff.
Twelve former employees filed the petition so they could get wages, holiday pay and redundancy money they claim they are due since the company stopped trading in October 2008.
This is unlikely to be the end of Conlon’s court appearances. The Revenue Commissioners adopted a watching brief at the proceedings although they have yet to initiate any proceedings. Court records show that Xsil is a defendant in two other cases. One is being brought by Enterprise Ireland, which is understood to be looking for the repayment of grants which were linked to job creation, and the other by Coherent Europe, a multinational supplier of laser technology.
The demise of Xsil was as rapid as its rise. In the last decade Xsil twice won Deloitte’s Fast 50 award for being Ireland’s fastest growing technology firm. Its most recent filed accounts show it generated a pretax profit of €8.5 million on sales of €38.3 million in 2006.
Xsil supplied laser cutting equipment to computer chip manufacturers. The downturn in sales seems to have coincided with Conlon’s stepping back from an executive role to focus on his latest venture, Ammado, which has been described as a Facebook for charities and their supporters.
Ammado is not without legal problems of its own, with Trinity College, its erstwhile landlord in the Enterprise Centre on Dublin’s Pearse Street, having lodged a case against it.
Just to ensure Conlon keeps his lawyers busy, the sale of Xsil’s technology to a US buyer for $2.3 million last year, on which many of the former employees had been pinning their hopes, is now reportedly being challenged in the US by an ex-employee.
Conlon became a multimillionaire in 2001 when a previous company, MV Technology, which he co-founded, was sold for close to $100 million, but he seems to be struggling to re-find the Midas touch with his latest ventures.
Curious timing
Reports that Bank of Ireland is planning to raise at least €1 billion in a cash call confirmed what was widely expected. The most interesting element of the latest speculation is that the bank will do so over the next six to eight weeks. With so much uncertainty still around the banks, it’s difficult to call exactly when they can comfortably convince shareholders that they are investment propositions.
The effect of the Nama haircut on the bank’s capital and the EU Commission’s response to the bank’s restructuring plan showing it has a viable future and can repay the Government the State’s €3.5 billion remain unknown.
The Government had initially said the banks would be able to calculate “a read-across” figure on all Nama-bound loans from the top 50 or so borrowers to be transferred over the coming months. But deadlines have slipped. The first loans were to have transferred by February 12th but this has been pushed out until later this month, though no one will confirm this, presumably fearing that the deadline may slip again.
UBS, Bank of Ireland’s broker, and corporate finance adviser Credit Suisse, where senior executive Chris Williams is assisting the bank, have been working on capital raising plans. Last month, the bank’s governor Pat Molloy said it would look to raise capital by internal and external means. Some €405 million was generated last week in a debt swap and Davy stockbrokers expect the bank to book a further €600 million on further debt management. The firm said that it expected a further €1 billion to €1.2 billion to come from a rights issue.
Interpreting Molloy’s comments, the bank is preparing to tick the next box on its capitalgenerating list with the rights issue.
Brussels is expected to offer its conclusions on the bank’s restructuring plan later this month or early next, which should help the bank, but holding a rights issue over the next six and eight weeks may still be a touch optimistic.
Fly in the ointment
Ryanair’s Michael O’Leary has succeeded in grabbing the headlines again. This time it’s his attempt to get Tánaiste Mary Coughlan to instruct Dublin Airport Authority (DAA) to sell its Hangar Six to the airline, which says it is prepared to create 300 new jobs in aircraft maintenance there.
Aer Lingus, Ryanair’s main competitor in the local market, occupies Hangar Six. This has prompted speculation that the row is simply about O’Leary having a go at the DAA and his rival. Others suggest that what he’s after is some real estate in the airport, which Ryanair can ultimately convert into its own terminal. O’Leary dismissed this yesterday, saying that any transfer of the property could include terms preventing the airline from doing this.
He wants to meet Coughlan today, and wrote a letter yesterday outlining his demands, namely, the direct sale of the hangar to Ryanair, or its lease to the airline via the IDA, with the DAA kept out of the deal either way.
On the one hand, it would set a tricky precedent if the Government were to circumvent the board and management of a State company – the DAA – and allow Ryanair its way. Or Coughlan could take him at his word, and say, “You can have it, but only for maintenance and you must hire the numbers you say you will employ within a set period of time”.
If nothing else, it puts the ball back into his court, which, you suspect, the Government is itching to do.
Finance ministers from all EU countries gather today to debate how to lend support to Greece in line with the agreement by the heads of state last week without contravening EU law.
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