2e2 calls in administrators
UK IT services provider, which acquired Morse in 2010, collapses under the weight of its debt
The UK operations of 2e2, one of the UK's largest IT services companies, have gone into administration after the company failied to win finance to repay its considerable debt.
Financial advisory FTI Consulting has been appointed as administrator for 2e2's UK divisions "following the failure to secure additional funding for the business".
"We are working closely with management and other key stakeholders to ensure the continued provision of business critical services to the group’s customer base," said FTI Consulting's Simon Granger. "In parallel we are exploring strategic options for the UK business and have commenced a disposal process for the overseas subsidiaries”.
The privately owned company had borrowed a total of £153 million to fund a number of acquisitions in recent years, including that of rival Morse for £70 million in 2010. The interest on its debt repayments for 2011 was over £20.8 million – entirely wiping out what would otherwise have been a £20 million profit.
Writing about the news this morning, TechMarketView analyst Anthony Miller wrote that 2e2 "forgot what its knitting was (UK infrastructure services) and branched out into new service lines and geographies on the back of a number of ‘bold and courageous’ acquisitions."
"For me, the ‘boldest’ was that of Morse back in April 2010 over which I raised serious concerns at the time (and indeed since)."
In September last year, as reported by The Register, 2e2 was issued with a county court judgment over the late payment of £14,000 in debt.
2e2 is owned private equity firms Duke Street Capital and Hutton Collins. In 2011, Duke Street Capital tried to sell 2e2 and at one point Cable&Wireless was in the frame to buy it, but the deal fell through.
The Newbury-based company employs around 2,000 people.
2e2 could not be reached for comment.