The Alfacam Group: impulsive growth and financial distress

This case is available at The Case Centre with reference no. 115-067-1.

The Alfacam Group was a Belgian company that provided facilities and services for television and production companies between 1987 and 2013. Alfacam was a world-leader in the provision of high-definition (HD) TV services and wireless transmission, and had gained a significant competitive advantage in these markets. Since 2002, its tailor-made HD outside broadcast (OB) vans were sent around the globe to capture many prestigious sporting and cultural events like the Olympic Games and the MTV Awards. Having experienced phenomenal growth since its inception, Alfacam became a listed company on the Belgian Stock Exchange in 2007.

Yet, in 2009, Alfacam began experiencing difficulties in repaying its creditors. The situation worsened steadily, leading to violation of several financial covenants in 2010-2011. The bankers were becoming inpatient and potential investors were reluctant to step in and assist the company under the conditions that prevailed. With limited options, founder Gabriel Fehervari was forced to file for protection from debt-holders in court. By the end of 2012, Alfacam managed to elicit interest for an acquisition by the Hinduja Group, a prominent global conglomerate based in the United Kingdom, and began detailed negotiations for a potential acquisition.

This case portrays the turbulent history of Alfacam, beginning with its inception in 1987, its IPO in 2007 and the failed takeover attempt by Hinduja Group in 2013. It begins by describing the history of the company and its strategic choices. Long-term and short-term warning signs, preceding the phase of financial distress, are highlighted. Together with a description of Alfacam’s financial performance, this case documents the stock market reaction at each step, ranging from strategic decisions to press releases on negotiations with banks, shareholders and potential investors. Finally, the failed take-over attempt by the Hinduja group and the ensuing bankruptcy are discussed.

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