Baltimore sale points to further jobs cuts

FURTHER redundancies are likely at security software firm Baltimore Technologies following the sale of its last significant business unit yesterday.

Baltimore announced that its core security business public key infrastructure, or PKI has been sold to British firm BeTrusted for £5 million (7.1m) in cash and ends the assets disposal programme which began under chief executive Bijan Khezri two years ago.

Baltimore said many employees in the PKI business are based in Ireland and some would be taken on by BeTrusted, but the majority of the remaining staff will be made redundant.

The company employs around 250 employees in Britain and Ireland, but a spokesman for Baltimore could not say how many redundancies would be made in Ireland or when.

At its peak, when Baltimore was a member of the FTSE100, the company employed 1,400 worldwide.

The company is now essentially a cash shell with just two remaining business units, one of which is a minority stake in its former Japanese operation. The spokesman said Baltimore will make a decision on its future in coming months.

The sale of the PKI business will need the assent of shareholders at an extraordinary general meeting before it can go ahead.

"This transaction is our last significant asset disposal and will deliver on our commitment to eradicate operational cash burn and maximise shareholder value.

"The cash balance resulting from Baltimore's successful asset disposals effectively puts the future strategic options available to Baltimore Technologies into a new perspective," said chief executive Bijan Kjhezri in a statement.

"We remain committed to maximising value for our shareholders and we look forward to providing an update in due course."

Mr Khezri said, on a standalone basis, Baltimore does not represent a platform on which to consolidate its businesses. The need for scale in the infrastructure software market makes the disposal of Baltimore's core PKI business an obvious proposal.

The PKI business forms what was left of Baltimore after all the other disposals and was the main revenue generator for the company with 300 clients.

However, some brokers were disappointed with the price Baltimore received for the PKI business.

"The price is less than we expected, given that the business generated approximately £19m in revenues in 2002 and is on a current revenue run-rate of approximately £12m per annum," Barry Dixon of Davy Stockbroker said in a note.

Cost-cutting and job losses helped Baltimore reduce pre-tax losses to £2.2 million in the first half of 2003 from £9.9 million last year on revenues down by more than half at £9.7m.