Elektrim to cut jobs at Internet subsidiaries
Elektrim is planning to cut jobs at its three Internet subsidiaries before selling them next year, the new president of the telecom and power conglomerate's online unit said Friday.
Elektrim Online, the division that oversees the parent company's portfolio of eight Internet and data transmission subsidiaries, will slash jobs at e-commerce firm Easy Net and IT firms CT Creative Team and VPN Service, said Marcin Zabielski, president of Elektrim Online. He would not say how many positions would be eliminated.
"In more than a year, Elektrim will not have any Internet companies," he said. "In the short term, Elektrim decided not to lose the value of the companies and to restructure (them) to maximize (their) value and sell them."
Elektrim has been mulling the fate of its eight Internet and data transmission subsidiaries since France's Vivendi Universal failed to buy them in September. At the time, the French utilities and media company paid O491 million for Elektrim's fixed telecoms assets, giving a much-needed financial boost to the heavily indebted parent company. Although Elektrim acquired the companies as part of its strategy to spend $100 million-$200 million on the acquisition of Internet-related companies, the firms now account for a fraction of Elektrim's assets since their values plummeted.
Elektrim plans to hold on to Easy Net, CT Creative Team and VPN Service until the general market situation improves. "If we sell them now, the price of the companies would be really low," said Zabielski, an independent consultant hired on an eight-month contract to sell Elektrim's online companies.
In addition, the firms will be restructured to focus on their core businesses. For example, Elektrim Online will revamp Easy Net, which operates the online shopping sites for the stores Galeria Centrum, Empik and Smyk, by eliminating its call center, warehouses and fleet of delivery cars, Zabielski said. He added that Easy Net could come close to breaking even in 2002.
Stanisława Cieślak, who works in Easy Net's PR department, said she was not authorized to comment on the restructuring plans or Elektrim's strategy for the firm.
CT Creative Team and VPN Service will undergo a similar belt-tightening process to realign them for sale.
"The operational activities are subject to valuation right now, but everybody knows they were over invested and have really high costs," Zabielski said of the two companies.
Elektrim increased CT Creative Team's capital by slightly more than zł. 10 million ($2.5 million) through a new share issue on Oct. 26, and raised VPN Service's capital from zł. 10,000 to zł. 500,000 on Oct. 30. Zabielski said he expected CT Creative Team to have a positive cash flow in the second half of the year, although VPN was debt-ridden.
In the meantime, Elektrim Online is trying to sell another firm, Internet-related software provider AGS New Media, Zabielski said, and will continue to hold discussions with prospective investors for the unit until the end of the year. But he could not say what the company's fate would be if Elektrim failed to find a buyer, except that "Elektrim has no point in financing a company that is losing money."
Beata Ptak, a public relations specialist at AGS Media, refused to answer questions and referred the caller to Elektrim's public relations department.
Elektrim also will not rescue its dying e-business service firm eCenter from impending bankruptcy, Zabielski said.
"(eCenter's) management is responsible for the situation," he said. "The costs of eCenter were high and the revenue low. In the long-term, the strategy is that Elektrim will not finance any of its companies that (generate) losses."
Doron Revivi, eCenter's chief executive officer, said last week that the company would run out of cash in the next few days and would probably file for bankruptcy. Elektrim owns 58% of eCenter, while the Internet incubator Internet Investment Fund owns the remaining shares.
Roseanne Gerin
