Tin-box shifter Michael Dell always knew that his outfit’s debt was going to be a bit high after buying EMC, but it is starting to look like it is getting heavier.
Dell’s debt was high after the company went private, but now it seems that the Wall St bond market will need higher interest payments to fund the deal. While there is still enough cash in the kitty to get hold of EMC, it means that there could be a fire sale of overlapping business soon after the sale takes place.
All this is because the weak quarterly results at Intel and the poorly received debt sale by disk-drive maker Western Digital are pushing up the costs of Dell’s coming debt issuance. Basically the bankers are a bit nervy about investing in hardware at the moment.
Dell’s ability to raise money through selling off some businesses is also suffering. His SecureWorks IPO is now priced at $14/share instead of the original $15.50 – $17.50 range, reducing the likely inflow of cash to Dell, and thus reducing its future debt needs less than it must have hoped.
All this could add tens of millions of dollars to Dell’s annual interest expense, something that Dell needs like a hole in the head. It is thought that to deal with the problem, Dell is going to have to flog anything not nailed down in the two companies. There are overlaps between the two companies which can be safely flogged off, but it is more likely that more cuts will have to be made. It is expected that there will be large numbers of former EMC or Dell staff looking for jobs when the agreement goes through.
The last of the remaining bidders for the broke 2e2 outfit have walked away saying that they are no longer interested in buying any of the company
The IT services group filing for administration and there was some optimism that the Newbury-based group would be sold to either Daisy or Computacenter.
In a statement, FTI, 2e2’s administrators said they had spoken to a number of parties who were interested in acquiring all or parts of the [2e2] business as a going concern.
But FTI said that it could not get an acceptable and deliverable offer to sell the business as a going concern and there is no further funding which can be made available.
Contractors and suppliers will not get paid and 2e2’s data centre clients appear to have been asked to stump up with more dosh to keep the servers switched on. According to Contractor, a letter had been sent out to clients telling them that not paying would result in FTI being “unable to maintain [2e2’s] Data Centre Infrastructure” and the whole lot will be switched off before any customers can get their data back.
However in its letter, FTI hinted that it will be impossible for customers to get their data back in a hurry as it had been hit by a number of requests from customers seeking to gain access to their data immediately. It thinks that the levels of data stored at the company will take up to 16 weeks to get out of the system, and if customers don’t pay up to keep the servers open they will lose everything.