Seán Corkery, the former head of engineering services company Actavo who was enlisted in April as Datalex's deputy chairman, sought to inject much-needed optimism into the troubled travel retail software group when he was named its permanent chief executive a month ago.
“The time I have spent at the company so far has convinced me that there is a significant market opportunity, a powerful commercial model and we now have a very strong team in place to capitalise on this,” he said, only weeks after the group, hit by an accounting scandal earlier this year, unveiled a record $50 million loss for 2018.
For Dermot Desmond, Datalex's largest shareholder and the only man willing to whip out a cheque book to provide emergency cash to the company in recent times, it's more of a matter of seeing is believing.
The businessman, who provided €6.14 million of loans and €3.86 million in equity financing to keep the wolf from Datalex’s door earlier this year, has committed a further €5 million of debt, subject to a shareholder vote next week.
In return, his Tireragh vehicle – which is providing the money – is insisting on Datalex providing it with monthly financial statements within 20 days of the end of each month and consolidated financial statements for each half year within 60 days of the end of a reporting period.
Desmond has extracted tougher conditions from Datalex for the additional emergency cash, including stipulations that the company would be deemed to be in default – and all loans from the businessman immediately repayable – if its sales and earnings are at least 20 per cent below forecast for two months in a row.
If Datalex didn’t have the money to meet a repayment demand, its business could end up in Desmond’s hands.
The strict conditions – and the punitive 10 per cent rate attached to the Desmond loans – will serve to focus Corkery’s mind on raising equity as soon as possible to refinance the emergency funds.
He will have his work cut out convincing the stock exchange to lift a trading suspension on Datalex’s stock – after its auditors refused to sign off on its 2018 annual report – and getting investors on board.
