Logicom Dubai hit with US$6m-plus credit exposure
Logicom Dubai is chasing more than US$6.1m in outstanding payments from three Dubai-based resellers as the sheer scale of the latest credit crisis to hit the channel becomes painfully clear for all to see.
Logicom Dubai is chasing more than US$6.1m in outstanding payments due from three Dubai-based resellers as the sheer scale of the latest credit crisis to hit the channel becomes painfully clear for all to see.
Components distributor Logicom, which is quoted on the Cyprus Stock Exchange (CSE), has seen its share price slump 20% since the company revealed the difficulties it was having in collecting the payments.
Logicom issued the following statement to investors: “In order to fully inform the investing public, the company announces that it faces difficulties in receiving amounts receivables from three customers in Dubai as follows: Amount of CYP1.38m (US$3.1m) for which bank cheques had been issued. The cheques have been returned unpaid; Amount of CYP640,000 (US$1.44m) for which there was a personal guarantee. The bank cheques that had been issued have been returned unpaid, as well as debentures; Amount of CYP725,000 (US$1.63m) for which there was a personal guarantee. The bank cheques that had been issued have been returned unpaid.”
The statement continued: “The debtors said that their inability to pay their debts is attributable to cash flow problems. The company has proceeded to all necessary acts and has taken all the necessary measures. Apart from possible repercussions on the financial results, the problems are not expected to curb the development of the company’s operations in the region.”
As an authorised distributor for Intel, Logicom was a significant supplier of CPUs to the main sub-distributors operating out of Dubai. While Logicom did not name the customers in its statement to the stock exchange, other distributors in the market have confirmed that cheques from MID-Fortex, Micron and MST have all bounced in recent weeks.
This is not the first time that Logicom’s Dubai operation has been exposed to significant bad debts. Investors in the company must now be questioning whether or not the rewards of having an operation in Dubai are actually worth the financial risks involved.
Besides Intel, Logicom Dubai carries product from a number of other major vendors including Cisco, Fujitsu Siemens, IBM and Microsoft. A spokesperson at Logicom Dubai claimed that general manager Nicholas Argyrides was currently in Cyprus meeting with senior company executives.