Troubled ASP FutureLink Corp.
today announced a 5-percent workforce reduction, consolidation of its U.S. datacenters, and an expense control plan expected to save the company $7 million this year.
“The changing market environment and economic conditions have required an extensive analysis of FutureLink’s business infrastructure and strategy,” said FutureLink CEO Howard Taylor. “Accordingly, we have elected to consolidate our domestic data centers into our Lake Forest, California facility, and streamline our marketing and administrative organizations.”
These cost-cutting measures were announced on March 30, when FutureLink released disappointing Q4 financial results.
The company also announced that it has amended its agreement with Foothill Capital Corporation, a subsidiary of Wells Fargo & Company (NYSE: WFC), so that it will be in compliance with the terms of Foothill’s loan covenants. The amendment requires the company to raise at least $5 million in additional debt or equity financing by May 31, 2001 and another $5 million by June 30, 2001.
To this end, Pequot Private Equity, the venture capital arm of Pequot Capital Management Inc., invested $3.5 million in a secured bridge financing and committed to invest an additional $1.5 million by the end of May 2001. This bridge loan will satisfy the first $5 million debt or equity infusion obligation required by the amendment with Foothill.
“Reducing operating costs and increasing working capital are two elements of my plan to return the company to financial health. While the recent transactions with Foothill Capital and Pequot Private Equity are important steps to address our working capital position, we are continuing our efforts to raise additional capital and to reduce expenses consistent with the current economic situation. We feel that these actions keep us on track to reach our goal of achieving EBITDA breakeven by the end of Q4 2001,” Taylor said.
To help guide the company through these troubled times, FutureLink has appointed Eugene L. “Gene” Froelich as the company’s executive vice president (EVP) and chief financial officer (CFO). Froelich replaces Rick White, who returns to his previous job as senior vice president of corporate administration.
Prior to joining FutureLink, Froelich was the chief operating officer (COO) and CFO at Wizshop.com, an Internet shopping service that was acquired this month by Semotus Solutions Inc., in a stock-for-stock purchase agreement.
Froelich also spent 16 years at MCA Record Group, the largest record company in the world and a subsidiary company of MCA Inc. He later joined Maxicare Health Plans Inc., as EVP and CFO for nine years, where he guided the successful financial restructuring of their business and the return of the company to profitability.