The creditors of Tulip Computers, the Dutch PC maker, have agreed to the terms of a rescue by the Royal Begemann Group, a Dutch investment company.
The final hurdle, which should be a formality, is approval by the Court on 22 July. In August, the creditors will receive part payments from a subordinated loan provided by Begemann. It is likely that Begemann will eventually acquire a 30 per cent to 35 per cent holding in Tulip as part of an agreed share transaction.
When Tulip admitted to difficulties earlier this year, Vobis and Packard Bell NEC expressed interest in acquiring Tulip, but the solution proposed by Begemann was accepted by the receivers. The result is that the Tulip name will continue.
Tulip's problems arose from its inability to increase sales in a tough marketplace, and the cost of a new facility. Tulip has been amongst the top 20 PC makers in Europe, but like many other second tier PC makers, has found the cost of pan-European and Far East marketing to be too high, in view of the economies of scale achieved by the first-tier global PC makers.
Tulip now forecasts a modest operating profit of four per cent of turnover for 1998. The 1997 loss was NLG 27 million on sales of NLG 461 million, that followed a loss in 1996 of NLG 10 million on sales of NLG 527 million.
The lease of Tulip's new state-of-the-art plant, which runs on SAP software and is capable of producing more than a million PCs a year with a 48-hour turnaround, has been acquired by Ingram Micro as a strategic hub and pan-European integration centre. It is the second of Ingram's five planned centres, the first being in Tennessee. Tulip has outsourced its manufacturing to Ingram.
Tulip expects to sell around 60,000 PCs in 1998, increasing to 150,000 per year in the next few years. Tulip will continue with some 250 employees, around half of whom will be in the Netherlands, with over a hundred ex-Tulip employees taken on by Ingram.
The net result is that around half of Tulip's 700 employees found themselves on the job market. Tulip will maintain its sales and distribution offices in the Netherlands, Belgium, France, Germany and the UK, with decisions yet to be made about other countries.
Tulip has had a long history, being founded in 1979 by Franz Hertzenauer and Rob Romein, who will be resigning when replacements have been found. In September 1997, Tulip acquired part of the Commodore business, and used the well-known brand name for consumer PCs to complement its existing business PC lines.
It was never clear how synergies would be achieved by keeping the two product ranges differentiated, and using entirely different channels. The Commodore range sells in 11 European countries through retail chains.
It remains to be seen whether Tulip can produce profits from its brand name and channel. Tulip's predicament may well be prelude for further restructuring amongst other similar-size European PC makers.
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