Orga KartensystemeGHP Holding GmbH( 2003-02-28 ), -- ERG trade data forum

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Date Posted: 18:26:57 03/02/03 Sun
Author: low-end telephone and loyalty cards.
Subject: Orga KartensystemeGHP Holding GmbH( 2003-02-28 ),

German Company Rescues Orga

Smart card vendor Orga Kartensysteme has a new lease on life, with the announcement today that the failing German vendor is being taken over by GHP Holding GmbH, a printing, direct marketing and fulfillment company, which also produces low-end telephone and loyalty cards.

A representative of Bamberg, Germany-based GHP says with the deal, the threat of insolvency will no longer hang over the smart card vendor�s head. GHP will improve Orga�s efficiency while continuing to fund its push into the chip-based banking, loyalty and ID card markets, says Matthias Eickhoff, who handled the takeover for GHP. The company is also committed to helping Orga regain its former market position as a supplier of subscriber identity module cards for mobile phones, including funding the necessary research and development costs, he says.

But, with smart card prices still depressed and the timing of a full recovery of demand in the SIM and banking markets anything but certain, why would GHP take a chance on a vendor that reportedly lost more than 100 million euros last year alone and nearly drove its former owner into bankruptcy? For one thing, GHP got a good price�it paid just 1 euro for the 1,200-employee vendor, including its associated systems integration house, sources say. The rest of the former German federal printing office, of which Orga was a part, remains with its owner, the Berlin-based Authentos Group.

Besides the price, GHP was interested in Orga for the latter�s technology, which GHP believes will help it eventually upgrade its magnetic stripe loyalty cards to more sophisticated chip-based cards. Moreover, it believes it can add value to Orga�s other smart card offerings, providing such services as fulfillment to card issuers, such as telco operators, banks, insurers and retailers. For example, GHP could mail out SIM cards, packaged with letters and even mobile phones to GSM operators.

In addition, GHP, which provides cards and fulfillment for two of the largest loyalty card programs in Germany, believes it can cut Orga�s manufacturing costs. �GHP is able to produce low-margin products with profit, and we will bring that to Orga,� Eickhoff says.

Whether GHP, which employs 2,300 people and generated 260 million euros in sales last year can turn Orga around, remains to be seen. But news of the sale, announced today by the Authentos Group, is a definite relief to Orga employees. While a restructuring plan designed to cut another 200 jobs remains in place, most of their jobs are safe, at least for the time being. And, they won't have to keep reassuring customers and the vendor�s own suppliers that the company will be around in the next business quarter.

�This message is very positive signal for us, for the employees, for customers and people who deliver us with goods,� says an Orga spokesman. �Orga was a technology leader and we will be one again.�

Orga�s reprieve may be cold comfort to venture capital firm Apax Partners, which paid 1 billion euros in late 2000 to buy Orga and the rest of the German federal printing office, or to Landesbank Hessen-Thuringen (Helaba), the German public bank that lost many millions financing the deal. But what was once one of the �Big 5� vendors will continue to supply products in an increasingly competitive smart card industry.

( 2003-02-28 )

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