German consultant Heubeck may be sold

FJH, the Munich-based IT company is considering selling pension advisor Heubeck AG seventeen months after acquiring it.

Sources familiar with FJH’s plans said the possible sale of Heubeck was linked to the IT company’s efforts to restore profitability after falling deeply into the red this year.

Apart from owning Heubeck, FJH supplies software products to European insurers. It has been decimated by a severe cut in IT spending by those insurers.

In August, the quoted company reported a pre-tax loss of 11.6 million euros for the first half of 2004. This compared with profits of 12.6 million euros for the first half of 2003.

Following the results, FJH said it had implemented a drastic cost-cutting programme involving the shedding of 200 jobs, claiming the programme would enable it to break even in 2005. It gave no details regarding the future of Heubeck, which it acquired in May 2003.

FJH spokeswoman Martina Faßbender said she “had heard nothing at all” about her company’s plans to sell Heubeck. “Such a move would make absolutely no sense for us, if you consider that the German pensions market is an important market for us,” she said.

Taking advantage of the nascent German pensions boom was indeed the motivation behind FJH’s takeover of Heubeck AG. But since the transaction, valued at between 10 and 12 million euros, FJH has suffered setback after setback.

In November, FJH faced unsubstantiated charges of falsifying its accounts, which led to a heavy sell-off of its shares. Its descent into the red during the first half of 2004 prompted its dismissal from the TecDax, Germany’s index for technology and growth stocks.

According to Knut Woller, an analyst at HypoVereinsbank who covers FJH, the firm’s financial situtation is tight.

Woller says that FJH has only 16.5 million euros in cash to pay off 25.8 million euros in debt, around half of which is short-term.

“In such a difficult situation, it is of course possible that, beyond restructuring, a company might have to sell off valuable assets,” he said.

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