Thursday, September 25, 2014

BPN 1690: Swets & Zeitlinger Group suspends payments

The Dutch company Swets & Zeitlinger Group has filed for bankruptcy due to insolvency, but the court has granted the company deferment of payments to creditors, mainly publishers. Main activity of this company was mainly broking subscriptions between publishers and  libraries for professional use such universities and professional institutes. Swets & Zeitlinger Group have two months to find a solution and new financers.

The Group is the mother company to Royal Swets & Zeitlinger Holding. This holding with a slew of subsidiaries is worldwide market leader in subscription services to academic and professional libraries in 160 countries. It has offices in 27 countries and employs 541 FTE. It has more than 8,000 customers worldwide, representing more than 800,000 subscriptions to its offerings.

Adriaan Swets and  Heinrich Zeitlinger started in 1901 a bookshop in Amsterdam, named Swets & Zeitlinger. From this Amsterdam base it grew into an international publishing company, adding amongst others library services. By 2003 it sold the publishing division, which published amongst others test material, and focussed on library services. Royal Swets & Zeitlinger offers subscription services for 35.000 publishers to universities and institutional libraries. Half of the turn-over comes from the 10 largest publishers such as Elsevier and Springer. But as universities and institutional libraries are still in the process of changing over from subscriptions for paper publications to digital publications.  Commissions on digital products are lower than print subscriptions with the average gross profit margin for print subscriptions at 10.5 per cent to digital at an average gross margin of 4.4 per cent. Digital formats have also facilitated large publishers to establish direct customer relationships, resulting in partial customer losses. These developments combined with the economic crises  have hit Royal Swets hard. Last year the company lost 1,9 million euro on a turn-over of 550 million euro. A banking consortium and the financer ICG are set to loose 72 million euro.

At the beginning of the year the shareholders of the company put the company up for sale, as it needed more capital to go through a transformation and scaling up. This sale was said to be expected in the third quarter. But now Royal Swets has been overtaken by financial problems and has shareholders not willing to jump in. Royal Swets has now two months to find a new shareholders, to merge or be acquired or to sell the slew of companies separately.

Elsevier and Springer have informed their clients to be careful with payments as they might loose their payments in a bankruptcy.

EBSCO, Swets competitor in the global arena, has reacted to the problems of Swets. The company praises Swets as an honorable and professional organization with many astute and gifted personnel.
But it hopes to be a landing place for some of the personnel who will be out of work and is ready to help customers to avoid disruption in service. In the reaction EBSCO assures the publishers and clients that EBSCO continues to be financially very strong, having the highest possible rating by credit rating company Dun and Bradstreet.


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