iMPath restructures after financial woes
OTTOWA, Ontario-Managed video networking system manufacturer iMPath Networks Inc. is in the middle of restructuring after filing for the Canadian equivalent of bankruptcy protection to reorganize.
Reorganization comes afterÃ‚Â the company hit financial troubles due to the slowing economy, a downturn in sales and its tying up of cash to buy other businesses. According to a report from Ernst & Young compiled for the company's list of creditors, iMPath reported $22 million in net losses during 2001.
"We had anticipated stronger sales," said Terry Kulka, who was recently named president and chief executive officer of iMPath. "With the weakening economy we did not see the sales volume needed to sustain the company that we had become."
Like many other companies, iMPath grew rapidly. While it secured $16 million in financing in 1999 and revenues grew 300 percent the next year, by 2001 it could not secure additional financing to maintain its growth rate.
The company had bought two business to help it technologically expand -- MultiDev JDL Communications in June of 2000 and AMG Systems, located in the United Kingdom, in early 2001. And, its employee base grew to 110 people.
But unlike some companies, iMPath began to chart a course for a turnaround when it saw trouble ahead. It cut its workforce to 40 people, changed senior management and secured additional financing from investors to complete the restructuring process and sustain the company.
Creditors approved the restructuring measure in January, followed by the courts in February. The approval allows iMPath to repay creditors who are owed approximately $5 million at 15 cents on the dollar.
Now, Kulka said the company is able to get on the right track. He expects the security market will remain a focus for the company, which provides video networking products for surveillance applications.
"We took a proactive step to do it," said Kulka about the changes implemented so far. "We're clearly back on our feet and progressing our business."