OK, on the cash flow problem of SFT. Yes there is a reason for this, including a lean year due to JAA and NVQ, but more importantly a single event before that. Some of you may know of the legal problems SFT encountered. Although SFT in effect won the case, costs were not awarded, so SFT lost a lot of money. The cash reserves were severely depleted.
SFT is still trading profitably. It is easy to understand why it may not have been doing so in 2000 with the problems of JAA and NVQ. However both will be overcome, were being overcome, because pilots are needed to keep the airline industry going.
I repeat
SFT did not have a problem of underlying weakness, the problem is lack of immediate liquidity, short-term funds i.e. a cash-flow problem, common in small businesses even if profits are healthy. In good times that is easy to cope with, as sympathetic banks look to proven future business, defined here by deposits taken. The training industry will be lean for a few months, and the banks don't like that. They have a very short-term view. I have seen it in another small business when their bank took fright at recession and withdrew a lot of credit. The banks proved stupid, as the business survived despite that problem, and would have done much better and thus paid the bank more if credit had been available to do more business
. Banks do not always see the strength of a business.
Many investors have a longer term view in mind. They can see the underlying strength of the industry and of SFT as a business. There was an offer being discussed recently, but it fell through. Now the same purchaser could buy SFT more cheaply. Who knows if he saved himself £100 000, half a million even by waiting a week. But by the administrator's judgement to the right investor SFT
as a whole (part of its assets are its staff who have proved very loyal and its good name) is worth more than its liabilities, and that investors are out there.
Just wait and see. There is no guarantee that SFT will be bought, but people who know very little about the business, and about the people who make up SFT do not help by posting downbeat assesments here.
Edited to correct my terminology.
[ 07 November 2001: Message edited by: Send Clowns ]