Paul Fleet - Fotolia
MXC Capital leads efforts to support IDE Group
The managed services player has found life tough but its largest shareholder has come to the rescue
MXC Capital has stepped into shore up managed services provider IDE Group to get the firm through challenging market conditions.
Earlier this year IDE indicated that it was going to focus on reducing costs because trading issues had hit cash generation and working capital.
That was followed up earlier this month by the MSPs results for 2017, which came with a warning from the chairman that profitability was going to drop year-on-year in 2018.
In response loan notes to the value of £2m have been raised with Kestrel Partners putting in £750,000, MXC matching that amount and then Salvators Lending Ltd contributing £500,000.
The loan notes have a three year term and the funds have been made available to support IDE's capital needs during the ongoing strategic review, which should be completed by the third quarter.
Ian Smith, CEO of MXC Capital, will join IDE's board and help steer the strategic review. Julian Phipps, who had been running operations, has stepped down from the Board with immediate effect.
Bill Dobbie, interim non-executive chairman of IDE Group, said that the long-term prospects of the business were good.
"Whilst the situation that IDE finds itself in is disappointing, I am pleased to be able to support the Company alongside other shareholders whilst it undergoes a strategic review. Despite the poor cash performance of the business, we believe that there is marketable value in the underlying business activities and the focus will be on restoring shareholder value," he said.
Smith said that it had an obligation to help IDE in its position as the firm's largest shareholder.
"Whilst as the largest shareholder we are disappointed at the situation that IDE finds itself in, we are pleased to be able to support the company both financially and strategically during this review period," he said.
