The story of K Tech Electronics, the company behind the Ultra Pro Computers stores, is coming dangerously close to an unfortunate end. Once one of the most important IT retail brands in Romania, along with Flamingo, Depozitul de Calculatoare and Best Distribution, Ultra Pro Computers rose in a time when computer retail was in its infancy and was the only one to have kept its initial business philosophy – small stores specialized in IT products, almost intact since the beginning. Now, the company is going through its most difficult moments in fourteen years, precisely because of this philosophy.

The main problem of K Tech now are the unpaid debts to banks and suppliers, which, according to a source close to the company, have exceeded 15 million euros. K Tech therefore defaulted both because of the lack of cash, as well as of the abruptly declining sales of late – with the same sources saying that the company’s business was slightly up last year to almost 80 million euros, around 1-2% of which was a net loss, but, in the first few months of 2009, the decline stood at more than 50% compared with the same time of the previous year.

One also has to consider the monthly expenses of the company, approximately one million euros, of which only 10% are personnel expenses, and the rest being used for rents and inventories, which contributed to the gradual postponement of payments and to the piling up of debt. Over two thirds of the 15 million euros are bank loans taken out by K Tech Electronics to develop the business, for which it pledged as collateral inventories and properties that have lost a lot of their value in the meantime as a result of the economic decline.

Payment delays of more than thirty days made UniCredit Tiriac, to which the Fughinas’ company owes 7 million euros, along with six other banks – Citibank, Alpha Bank, Banca Transilvania, BCR, Banca Romaneasca and BRD, to resort to the compulsory execution of K Tech Electronics. The banks won the right to seize the warehouses of the IT retail company – one of which located in the Key Logistic Center park and the other at the company’s headquarters in the APACA complex, so as to use the stocks valued at approximately 5 million euros to recoup some of their receivables.

Most of the stocks in the central warehouse were sold to Flamingo at the beginning of last month (an information which the officials of the company would not comment on) at a lower price than the actual value of the products, a source close to the company says, but the process was stopped when K Tech Electronics challenged the compulsory execution, thus putting the plans of the seven banks on hold. Debt to banks is not the only problem of the IT retail chain. Another over 5 million euros that Fughinas’ company did not pay in time should go to suppliers of products and utilities.

Part of them are already going to court to request that K Tech be summoned to pay or be declared bankrupt, the most recent such example being Tornado Sistems, one of the biggest distributors of IT&C products in Romania. ”The over six-month old debt we have to recover is not that high, it’s in the range of tens of thousands of euros, but so far we have not been able to reach a friendly resolution,” says John Cusa, chief executive of the distributor, explaining the filing with the Constanta Court of Law at the beginning of last week.

Traducere de Loredana Fratila-Cristescu si Daniela Stoican