Time Computers in refinancing talks

An ambitious expansion strategy and a reduction in the price of home computers has forced Britain's biggest PC retailer into refinancing talks with its bankers.

Time Computers - which employs more than 2,000 people and now has 180 high street stores across the country - is understood to be in negotiations with HSBC after running into problems with its aggressive expansion strategy.

Established in 1987 by two young entrepreneurs, Time decided to branch out into full scale retailing following the huge success of its original mail order-based offering.

But the expansion has hit difficulties because it has coincided with a slump in the home computer market.

Although sales on the high street are said to be holding up, PC retailers like Time are being forced to slash prices in order to shift stock.

According to industry experts, consumers are proving increasingly reluctant to keep buying new PCs. Many have become wary of buying a new model simply because it contains a new Intel chip or Mircosoft operating system.

Last week Gateway, the north American PC maker, shocked the technology world when it warned it would miss its forecasts for the current quarter after the expected post-Thanksgiving rise in sales failed to materialise. The run up to Christmas is traditionally the busiest time of year for PC retailers.

Directors at Time could not be reached yesterday, and HSBC declined to comment on the talks. However, sources close to the company indicated that Time's problems were of a temporary, rather than terminal, nature. It seems the company requires an injection of funds to see it through the tough conditions on the high street at present.

Separately, it was reported this weekend that Time is suing IBM for alleged fraud in the New York state supreme court. Time is said to be seeking £3m in compensation after receiving what it claims were defective memory chips from IBM.