French technology firm to attempt rescue deal for Iqon

A French technology company is prepared to make a significant investment in Iqon Technologies, a Co Louth computer firm that went into examinership on Friday with debts of almost €12 million.The French company expressed its interest in the past few weeks and negotiations on a rescue deal are ongoing, according to Ciaran O’Donoghue , a director and shareholder of Iqon.O’Donoghue said he was willing to invest further personal funds in the company, which employs more than 100 people in Dundalk.He said he was confident that the company would overcome its present financial difficulties. The company, which makes laptops and computer consoles, petitioned the High Court on Friday to be placed into examinership
Michael McAteer, a partner with accountancy firm Foster McAteer, was appointed examiner by Mr Justice Peter Kelly.McAteer will nowhave 70 days to restructure the company’s debts, during which time Iqon Technologies will have court protection from its creditors.O’Donoghue said that all of the company’s warranties and service would continue to be valid, and its customers would still be provided with after sales service. According to an affidavit filed last week, the company has debts of €11.8 million and assets of €5.4 million, leaving it with a deficit of €6.4 million.Microsoft Ireland Operations is owed €1.1million,while Japanese firm Dotop Technologies is owed almost €600,000.O’Donoghue, in his affidavit, said the company was profitable until 2005, but had experienced a significant downturn since then. It incurred losses of €1.6 million from January to August this year alone, he said.O’Donoghue said there were a number of factors behind the decline, such as the reduction in profit margins on laptops and increased competition in the market. In addition, the company had been hit by a high rate of product returns.Retail giant Tesco, which is Iqon’s biggest customer, had returned goods valued at almost €6 million in the past 18 months.The high rate of returns relates to Tesco’s ‘‘no quibble return policy”, whereby customers can bring back goods for any reason within a 12-month period.A significant number of people bought computers and then took them back almost a year later and exchanged them for a new machine. Iqon was forced to take back those returns, O’Donoghue said. The company also experienced a setback from a decision to diversify into software.‘‘Unfortunately, the product did not prove to be a commercial success,” said O’Donoghue. Iqon is owed more than €4 million by a related company, Iqon France, which was established by the directors of Iqon to target the French market.The company had hoped for a turnover of €35 million in France this year, but this will not be achieved.The court was told last week that the company had developed a new business plan, whereby it would focus on manufacturing external hard drive discs for Philips, expand into gaming PCs, and continue to manufacture computers on a smaller scale.The company’s directors are O’Donoghue and Dermot McElroy, who founded the firm, and Aidan Donnelly, the former general manager of Xerox Europe. McElroy and O’Donoghue are the main shareholders in the business, while Donnelly has a small stake.Recently-filed accounts show that Iqon made a pre-tax loss of more than €805,000 last year as turnover fell to €62.1 million.