Plain turns into gain After 8 months of suffering, Plaintree ready for
rebound
By KEVIN BELL, Business Editor, Ottawa Sun
Beleaguered Plaintree Systems Inc. may be a shadow of its former
self, but the firm said yesterday it's ready for growth after eight
painful months.
The Stittsville firm, which was at death's door earlier this year, is
close to completing a turnaround that will include the release of a
new product and the possible rehiring of former employees, chief
executive Jay Richardson said.
But getting to a position where the company can grow has meant lots
of sacrifices by employees.
"We have essentially taken Plaintree to the bottom in the last eight
months and taken it up the other side," Richardson told shareholders
at the firm's annual meeting.
Richardson was brought on board in late February after Plaintree had
already announced it would close for good if it didn't find financing
within 30 days.
The company, which had never posted an annual profit in its 11-year
history, launched a drastic downsizing as it searched desperately for
a saviour.
The restructuring cost 110 jobs, bringing the number of employees
to 30.
The saviour was Ottawa-based Targa Group, which will take over
Plaintree and operate as one of five subsidiaries. In a complicated
deal, Plaintree essentially takes over Targa while Targa receives 49%
of Plaintree shares and $2.8 million.
"All of this has been done without selling off any of the crown jewels
of the company," Richardson said. "Nobody said we were going to
be here after February, but here we are."
As part of the deal, creditors have reached a settlement with Plaintree
and the company is negotiating with holders of preferred shares to
convert them into common shares. Richardson expects Plaintree will
begin its new life under Targa's stewardship in November if the deal
is okayed by shareholders.
Although Plaintree revenues have shrunk to $4-5 million from $28
million in 1997, its sales could exceed all of Targa's existing
revenues, he said. Last year, Targa made $1.2 million in 10 months
on revenues of $8 million.
Richardson said shareholders seem to approve of the changes since
they have driven up Plaintree stock from less than 20cents last
month to 77cents yesterday. |
