NTG said BankWest -- one of two key capital finance companies integral to the reseller's equipment leasing contracts -- elected to audit all deals the financier supported after the company's sales tactics came under scrutiny from sections of the media.
NTG's announcement last week, that it would carry out one-for-one non-renounceable rights issue at 11 cents per share in order to raise AU$13.4 million dollars from the market, has caused some analysts to speculate on the state of NTG's relationship with BankWest and the company's other finance partner, Societe Generale.
According to some analysts the rights issue could indicate that the company has depleted its cash reserves by operating without backing from the two finance firms.
"It seems that the finance companies aren't dealing with them anymore and they have had to fund their own rental agreements. They used to sign up a customer and then sell the four year rental straight up to the finance company," said one analyst.
The analyst pointed to recent scrutiny on the companies sales strategies as possible cause for the rifts. He likened NTG's sales operation to a "boiler room" saying that its members were under high pressure to close deals and "may have gone a bit far" at times.
"The finance companies caught wind of that and thought 'we might pull back and see how this pans out'," he said.
NTG said neither BankWest nor Societe Generale have any intention of withdrawing support from the company.
NTG executive, Ron Nissen, said the company had chosen to carry out the rights issue in order to address some weaknesses in its balance sheet that it blamed on seasonal sales lags and negative publicity.
"The statement that I had from [BankWest] this week was that they expected to be a back providing finance to us as soon as [their] audit is complete," said Nissen. "So at the moment I have no reason to believe that we won't be back doing deals through BankWest in the near future".
Nissen said the company expects the rights issue to be completed by mid-March.
BankWest declined the opportunity to comment on the results of its audit.
NTG are now reaping what they have sown in the market place, TROUBLE. I was their state manager for 3 years in QLD and had to resign due to their underhanded tactics. Boiler room tactics is underselling the pressure they place on sales personnel. They had to cease hiring communications staff and hire used car sales people who did not understand what they were doing to the targets.
Enough said. NTG deserve what they are now getting. Although i doubt tony, George and Mick will pay the piper personally.