TECHNOLOGY

Rising vitality prices blamed as UK arm of colocation firm Sungard AS enters administration

Dave March 30, 2022

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Financial difficulties introduced about by downturn in ask of for its products and services for the length of the pandemic, coupled with ‘unparalleled’ vitality impress rises, force Sungard AS into administration in the UK

Caroline Donnelly

Caroline Donnelly,
Senior Editor, UK

Printed: 29 Mar 2022 17: 00

The UK arm of US-based mostly mostly colocation massive Sungard Availability Companies and products has entered administration after falling into monetary difficulties introduced about by spiralling vitality prices.

The path of is being overseen by insolvency consultancy Teneo Restructuring, which confirmed that the firm had been “struggling in the face of rising energy prices”, coupled with the monetary fallout from the Covid-19 coronavirus pandemic, in an announcement to Computer Weekly.

The firm operates 16 web sites all the strategy via the UK, which embody some standalone datacentres apart from to server farms which will be paired with objective of job objective which will be designed for expend by corporations for the length of instances of disaster so they’ll continue to objective. The latter web sites are known as Location of enterprise Restoration Centres.

The Sungard AS’s most expose self-discipline of UK monetary outcomes procure been filed in February 2020 and duvet the 12 months to 31 December 2020, and paint a image of a firm whose fortunes had been negatively plagued by the Covid-19 pandemic prompting some purchasers to minimize their IT spending.

“This has resulted in particular datacentre and place of job products and services turning into unprofitable, with mounted lease and vitality prices now no longer being offset by customer revenue,” its accounts stated.

“The firm has taken several actions to mitigate these impacts, including the graduation of negotiations with landlords and invoicing clients for additional prices incurred on their behalf.”

The doc then goes on to reference the toll the upward push in vitality prices “to unparalleled ranges” for the length of the 2nd half of 2021 has taken on its alternate.

“Whereas the firm had hedges in objective to partially mitigate these impress increases, the magnitude of the vitality fee lengthen has attach additional stress on the alternate, including on a survey-forward basis.”

To assist it weather the fallout from the pandemic and the uptick in vitality prices, the doc confirmed the firm had sought additional monetary increase from its investors to the tune of $20.5m, which became once due for repayment by 31 Would possibly doubtless well 2023.

As well to this, the Teneo commentary confirmed the firm had engaged with its landlords, clients and its mother or father firm to survey a “consensual restructuring, [but] without reference to the board’s most fascinating efforts, these discussions procure no longer been productive”, it mentioned. “The board therefore concluded that, without the requisite customer and landlord increase, there became once no longer viable turnaround plan on hand.”

This in turn ended in the appointment of Benjamin Dymant and Ian Wormleighton from Teneo as joint administrators, the commentary added.

Since their appointment, the pair procure succeeded in securing a small amount of funding to enable Sungard AS to withhold trading while discussions with its landlords and clients continue, apart from to giving it time for the administrators to decide on up a skill buyer for the alternate.

“This funding offers a platform to attain the firm’s discussions with landlords, to optimise fee and efficiency, and with clients, to bolt via increased energy prices. The flexibility for the alternate to continue to alternate in the medium to long length of time, either to enable a rescue of the alternate as a going bother or to suppose person asset gross sales, will be reliant upon burden sharing from each and every clients and landlords alike,” mentioned Dymant, in an announcement.

“We are able to be working with the shareholder and diversified stakeholders to additional protect into yarn the flexibility for the firm to continue trading on a day after day basis. Any adjustments will be communicated without prolong with clients, staff and suppliers.”