HBOS pulls the plug on Xansa

THE battered technology sector suffered a double whammy today when Xansa revealed its joint venture with Halifax Bank of Scotland would fold and fellow software company AIT Group suspended trading in its shares as a result of its cashflow crisis.

Xansa said HBOS wanted to end the pair's joint venture, which was set up to meet the all bank's software needs, at the end of 2003, four years earlier than planned.

HBOS will pay Xansa £9m as compensation for the profit it expected to make from the venture in the 18 months after December 2003. But Xansa will not be compensated for the additional work which may have been awarded to the venture by HBOS during or after this period.

Xansa director Steve Weston said that the jobs of the 550 people employed by the venture could not be guaranteed beyond the end of next year.

Shares in the Hilary Cropper-chaired company dropped another 24p to 115p on the news, extending their crash from 382p at the start of the year.

Shares in AIT, which have slumped from 850p since January, were suspended at 32 1/2p after the company revealed its liquidity crisis could be resolved only by selling the business.

AIT's latest troubles mean its directors stand to lose the £700,000 they lent the company last month. The company said today it would be unable to sign its accounts for the year to 31 March 2002 until the sale was completed.