Baycorp-buster RMG falls flat

Friday 29th November 2002

Anybody who doesn't understand what corporate financiers mean by "integration risk" need only study receivables management group RMG.

The company, an Eric Watson-inspired attempt to roll up 22 smaller Australian and New Zealand firms into a group capable of taking on Baycorp, has traded as low as 4c.

Mr Watson has shared the pain. His Cullen Investments and associated interests hold 22% and he recently sent two directors on to RMG's board to give the company a kickalong.

Former Commonwealth Bank of Australia executive Ron Logan became the latest incumbent of the CEO hot seat on November 11.

His first task, judging from the odd nuggets of information buried in RMG's Stock Exchange disclosures, will be to sort out the IT system. Announcing a $A1.4 million operating loss on August 15 the company wrote off the carrying value of its old "Collect" system and said it would push ahead with a change to "Wincollect," a move that has not won favour among IT buffs.

It also said trading in June had been profitable, indicating the monthly losses until then had come to an end.

Investors have heard this message before and are likely to keep the shares in the penny-dreadful bin until Cullen and Mr Logan's efforts produce an actual profit.

Comments from our readers

No comments yet