Regus to exit Chapter 11
The serviced office provider took advantage of the legislation, designed to protect bankrupt firms from their creditors, in January, following over-expansion in the US and a number of unprofitable rent agreements on the West Coast.
Under the terms of the exit, Regus will pay $6m (£3.8m) immediately to preferred creditors and $1.2m (£760,000) over six years. Other creditors will be paid in shares in the company, which will be placed in a custodial account to regulate the rate and volume at which they are sold.
Chairman John Matthews said: ‘We are delighted with today’s news. Exiting Chapter 11 within 12 months is a very positive result. With major reorganisation behind us, Regus is well placed to benefit from any sustained upturn in its key markets around the globe.’
The firm announced an £18.2m pretax loss for the six months to 30 June (£19.2m for the same period last year) and a £90m decline in turnover to £129m. The decrease in turnover was chiefly as a result of Regus’s sale of a 58% controlling interest in its profitable UK business to venture capitalists Alchemy in December last year, which served to recapitalise the group.
Over the six-month period, the group said that new orders for workstations in the second quarter were up 8% on the previous three months and that it had conducted £30m of major corporate outsourcing deals, with clients including IBM, Xerox and Kodak. It has also amassed £50m cash-in-bank.
Revenue per available workstation, the group’s key indicator, was up 5% on the first half of 2002.
Projections used to illustrate the group’s reorganisation plan suggest that it expects its net income to return to profit in 2005.
Communications director Stephen Jolly said: ‘Our overall business concept is sound and is proving very popular. Corporate outsourcing is a growth area, our model answers that need and on that basis we’re pretty confident going forward.’
Regus’s share price dropped 2.6% during early trading to 37p.