The profitable UK arm of Gandalf is set to disappear into oblivion as rumours grow that the Canadian parent has ruled out a management buyout here.
Gandalf Technologies, the 25-year old Canadian networking company, cut 180 staff 10 days ago and acknowledged the severity of its financial problems, seeking sanctuary under the Companies' Creditors Arrangement Act (CCAA).
The CCAA order may be no more than a stay of execution, suspending the claims of creditors until 31 October - but its purpose is to grant time to restructure and reorganise, preferably attracting new funds or a buyer.
Gandalf is looking for an investor to buy all or part of the company, but at this stage it seems to have few suitors. The Securities and Exchange Commission filing says no offers have been made to date, although the company has been actively looking for a white knight since February.
Rumour has it that the UK subsidiary made a management buyout offer which was refused.
When asked if there was any substance to this, Paul Beaumont, head of Gandalf's EMEA business, said: "No comment. We (Europe) have our own boards but the UK is wholly-owned by the Canadian company. Any offers would be considered by a combination of the North American and European management."
Financially, the European arm appears stronger than the parent company, and despite a worldwide fall in revenues, the North American loss was larger by an order of magnitude. Product and service revenues in North America (US and Canada) were $26.1 million (#16.3 million)in 1997, down from $54.4 million in 1996 and $55 million in 1995.
For the same period Gandalf's European direct sales markets, covering the UK, Holland and France, reported total revenues of $34.8 million in 1997 compared to $51.7 million the year before, and $54 million in 1995.
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