3rd November 2009, 06:40 AM
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Member
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Join Date: Mar 2008
Location: Auckland
Posts: 405
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Backers unable to keep flight simulation firm in the air
From today's NZ Herald
Quote:
4:00AM Tuesday Nov 03, 2009
By Maria Slade
Iain Pero, the brother of Mike Pero Mortgages founder Mike, is in the running to pick up the assets of failed flight simulator business Flight Experience Group.
Flight Experience was put in receivership last week by its bankers, owed $4 million.
The Christchurch startup manufactures and sells flight simulators for pilot training and entertainment. It has six outlets around the country plus sites in Australia, Singapore and Hong Kong.
It is backed by some big names. Mike Pero is a major shareholder, as is Sky TV founder Craig Heatley's investment vehicle Ocean Private Equity. The Warehouse founder Stephen Tindall's K1W1 also has a stake.
Those on the board include former Meridian Energy chief executive Keith Turner.
The company was placed in voluntary administration by its owners last month, but within a week ASB had called in the receivers over the top. Pero, who resigned from the board a year ago after previously being removed as CEO, said he was "furious about the whole thing, because it was bad management".
However, he said the plan was to relaunch the company with the assets bought by his Australia-based brother Iain, who has the Sydney Flight Experience franchise, and the business' founder, Russell Hubber.
Receivers Grant Thornton of Christchurch confirmed Flight Experience Group was being marketed for sale but said a deal had not been done yet.
"Watch this space" was the comment from Hubber, who started the business in his garage.
He said all staff at the head office in Christchurch had been made redundant.
However, the individual outlets were franchises and continued to trade.
He said the business had breached its loan agreements in February. "I personally believe the bank were extremely patient in allowing us to try and trade our way out."
Hubber said the business had exciting projected sales and the company had built infrastructure on the back of those forecasts - a decision he described as "bad judgment".
Pero has been highly critical of the direction the company was taking, sending a strongly worded letter to the board 18 months ago.
"The only reason it did not fail completely at this time was because they were able to lure more funds from new investors," he said.
"It's Business 101 - why put infrastructure in anticipating sales? It's round the other way."
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