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MMT launches legal action against Optima's retail business
- — 21 July, 2008 17:00
Victoria-based distributor, Multimedia Technology (MMT) has launched legal proceedings against Optima's retail subsidiary, Digital City, to recover hundreds of thousands of dollars in debt. The news comes as industry speculation mounts about the future of the ASX-listed PC assembler, Optima (ASX: OPI), after it called a trading halt on Friday.
According to a statement posted to the ASX, shares in Optima will "remain pre-open" until an announcement is made on Tuesday, July 22, or trading re-commences.
MMT managing director, John Hassall, said the distributor had not been dealing directly with Optima but confirmed it launched legal action against Digital City last week through the county courts for failure to pay bills between March and June 2008. The debt is several hundred thousand dollars.
Digital City, a CE retail chain with shopfronts in Sydney and Canberra, was acquired by Optima in October last year after administrators were called in. According to MMT, the company's head office has been procuring goods on behalf of all stores but several calls made by the distributor to Digital City's financial controller, as well as Optima's chairman and managing director, Cornel Ung, had not been returned at time of press.
ARN has been flooded with calls from industry representatives wanting to know more about Optima's situation, with some expressing concern about the company's future.
According to a source close to Optima, eight staff were made redundant in recent months, bringing its headcount down to about 100.
Optima's shares have been trading at $0.015 for the past two weeks. The company has consistently lost value during 2008, falling from $0.06 in January.
The Australian PC assembler has been confronted with challenges at every turn over several years as it struggles to compete against the multinational PC vendors for both state and federal government procurement contracts.
In its half-yearly accounts to December 31, the company reported a $5.1 million net loss including tax expenses of $2.8 million and impairment costs of $340,000, brought about by its acquisition of Digital City. Optima's operational loss totalled $2 million over the six-month period, while revenue was down 37 per cent to $26.2 million.
At the time, Ung said it had reduced its headcount by 13 per cent in December, mostly across education account management, to cut operational costs.