As reported exclusively by ZDNet Australia late last week, Spike has confirmed it has appointed administrators to help resuscitate the floundering company. An expected AU$5.8 million injection into Spike Networks Limited from an investor has fallen through, and as a result Spike Networks does not have the financial resources to provide additional working capital to Spike Limited, according to an announcement to the Australian Stock Exchange.
The majority owner of Spike Limited, Techpacific, has also declined to inject more funds.
Spike has announced the appointment of Peter Walker and Max Donnelly of Ferrier Hodgson as administrators, and is currently looking for a new investor.
"A range of people have expressed interest, but we'll have to see how that interest develops," Walker told ZDNet Australia. "With the tight cash flow I don't have the luxury of a lot of time to talk to these people."
Walker said he does not yet have a full understanding of Spike's financial position, and was unwilling to speculate on the number of creditors or how long it would be before the business runs out of money.
"For voluntary administration to happen the company was very concerned about its cash flow position," Walker said. "Needless to say, it was very tight and likely to become insolvent, if not already insolvent."
Management at both Spike Ltd and Spike Networks said that employee entitlements was an important issue for the company.
-We are trying to make this company an attractive prospect for an investor, which means staff, projects and clients," said Spike Ltd communications consultant, Tim Mendham. Employee jobs and entitlements were now in the hands of the administrators, he said.
Walker said there was a high probability jobs would be lost.
"There are 80 employees down there, its structure is too big for the size of the operation, so unfortunately I do have to look at the structure of the workforce," he said.
"The entitlements are a priority, but payments are dependant largely on whether I can sell the business. There's not a lot of fixed assets to fall back on, which is a problem with all the companies in this sector."
