Pisces Group out from administration, but still needs more capital

Mortgage broking IT solutions provider Pisces Group has emerged from voluntary administration after a five-week long ordeal.

But the company’s administrator says the group will need an injection of capital in the near future in order to keep moving forward as planned.

“To be frank, there is genuine need for recapitalisation in the company. The board is working on that, and I am working with the board with respect to that issue, but I think the outlook for that is positive,” says Robert Moodie, partner at insolvency and reconstruction firm Rodgers Reidy.

Moodie says the company, which is chaired by former Liberal leader John Hewson, had substantial amounts of debt which it gained from the acquisition of three smaller companies.

Pisces was also expecting another input of capital, and assumed it would be able to acquire finance without any difficulties, but Moodie says the global financial crisis made acquiring credit much more difficult.

Pisces recorded a $13.5 million loss in the year ending in June 2008, despite a profit of nearly $1 million in the previous financial year. Moodie said restructuring the company’s balance sheet was a “substantial matter”.

“There were a lot of reasonably involved issues that you’d expect with larger numbers. Debt problems, a lack of adequate capital and a higher than reasonable overhead structure. They were the standouts, but there were lots of other small issues.”

“But the deed of company arrangement has been resolved and accepted by the creditors, and was executed late last week. The document has been lodged and everything is looking positive. The board was very keen to get it signed.”

Pisces Group original founder and current executive Vincent Turner says the company is glad to have successfully completed the voluntary administration process.

“It’s been a good learning experience, and allowed us to deal with some stuff we’ve been having problems with in the past few years.”

“There was always this concern that ongoing debt would start to have pressures of its own on the business, and we got caught up in that. But we are coming back to the market with a stronger and healthier company.”