Dialog debts rise

By NICK GOODWAY FOR MAILONLINE
Updated:

 

Dan Wagner, chief executive of Dialog, the heavily indebted on-line business information business, would have liked to have restructured the company's finances last month, would like to next month and promised to do so by the end of the year.

In the meantime he ruled nothing out while his advisers thrash out the best solution. He said: 'We have a variety of very good assets which are not getting their full valuation or visibility in the market. If you ask me if any of them is for sale or a candidate for flotation: of course it is, as is everything in the business.

'But I don't want to pre-empt anything our banking advisers come up with. The banks want to be paid out. It may be through an issue of equity or convertibles or the sale of assets.'

The market, though, was disappointed by the lack of concrete news on the debt restructuring and Dialog shares fell 6 1/2p to 79p.

Wagner said that Dialog is concentrating on its $85 million (£53 million) of senior debt which is being repaid at $22 million a year with annual interest payments of $6 million. But he added: 'All the talk of a so-called crisis is not the way the banks see it.

'For the first time in many years we have seen a rise in revenues between the first and second quarters. We are confident with more than £10 million of contracted revenues from Fujitsu in the third quarter.

'That's why we took a $25 million loan with Chase Manhattan, so we can go on growing parts of the business. After all we have a profitable business in a high-growth area where many of our competitors are not making money.'

But that extra loan has raised Dialog's total debt at the end of June from £144 million to £168 million and extra interest costs helped to push pre-tax profits down from £4.9 million to £1.7 million. Revenues for the half year slipped from £88.7 million to £87.3 million.

Wagner said that he was not worried about the $180 million junk bond on which the group is paying a heady 11% interest: 'That's not something we need to restructure and if we did it would probably involve paying the holders a hefty premium.'

Wagner is confident about the second half but added: 'I don't want to drive expectations up such that we cannot meet them. We learned that lesson last year.'

Dialog is set to launch a new web search engine, WebTop.Com, in December that Wagner said would be a 'significant improvement' on current search engines.

The group compared it with Nasdaqlisted engines About.com, VerticalNet and Ask Jeeves. Similarly it compared its e-commerce software for business-to-business trading, Sparza, with the Nasdaq-listed Ariba and CommerceOne.

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