Cornel is seeking the protection of examiner for `restructuring'

CORNEL Electronics, one of the leading companies in the indigenous electronics sector, is seeking protection from its, creditors…

CORNEL Electronics, one of the leading companies in the indigenous electronics sector, is seeking protection from its, creditors.

"The company, which employs 85 people making modems in Tallaght will ask the court to appoint an examiner next Monday.

Mr Brian O'Sullivan, the acting chief executive, said the company needed protection from its creditors while it underwent a restructuring.

Cornel ran into financial difficulties because of cost overruns and other problems associated with the development of a new product, he said.

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Cornel was not under any pressure from its creditors or banks at this stage. However, he could not comment on whether the company's bank, Ulster Bank, or the Revenue Commissioners would support the appointment of an examiner.

He declined to say who the company would seek to have appointed as examiner. The Revenue Commissioners and the banks usually oppose the appointment of an examiner, who tries to put together a rescue package for a company.

Cornel was set up in 1981 by Mr O'Sullivan and Mr Michael Maguire, along with the company's chief executive, Mr Joe O'Callaghan.

Mr O'Sullivan said yesterday that Mr O'Callaghan is on sick leave.

The three founding directors each have a 17 per cent stake in the company, while ICC Bank holds 13 per cent and Irish Life 14 per cent. Forbairt has a 7 per cent stake, while the remaining 15 per cent is held by individuals who invested in the company through business expansion schemes.

A spokesman for Forbairt said yesterday that it had invested £250,000 in the company. Cornel had received another £1 million in capital and training grants from Forbairt.

The three directors set up Cornel after leaving another Tallaght electronics company, Telectron. They originally manufactured modems, which send data in electronic form down telephone lines, under licence from other manufacturers.

The company then developed its own high speed data pump, the core piece of technology in a modem, which it sold to other manufacturers. These sales account for 60 per cent of the company's turnover of between £6 million and £7 million a year.

The remaining sales come from modems manufactured for the Irish market and the sale of other manufacturers' products in Ireland.

Cornel ran into trouble when it tried to develop a modem for the international markets based on its own data pump, said Mr O'Sullivan.

The company did not have the funds to complete the development and planned direct marketing of the modem. The examiner ship process was intended to allow the company to develop an alternative marketing strategy and find new investors.

Mr O'Sullivan would not say what size of investment was required. But he said that no investors had been lined up at this stage.

The company petitioned the court for the appointment of an examiner last Friday and the court will decide whether one is to be appointed next Monday.

John McManus

John McManus

John McManus is a columnist and Duty Editor with The Irish Times