Colt Telecom launched a fierce defence of its financial health today as it dismissed a rebel bondholder’s call for the business to be placed into administration.
Chief executive Steve Akin said there was “no basis to question our solvency going forward” as he showed the telecoms group was continuing to grow revenues despite the economic gloom.
Colt’s largest office is 50,000 sq ft (4,645 sq m) in Beaufort House, St Botolph Street, EC3, on which the landlord is an unknown overseas investor.
The company also occupies 35,000 sq ft (3,252 sq m) at Great Portland Estates’ 79 New Cavendish Street, W1.
Sales climbed 12% to £259m in the three months to 30 September with Barcelona Football Club, media firm McCann-Erikson and car rental giant Europcar among those placing orders.
And while a hefty asset write-down flagged up last month pushed the group £609.3m into the red, Akin insisted Colt remained on course to be cash-flow positive by 2005.
US bondholder Highberry filed a petition in the High Court to have Colt put into administration on Tuesday, arguing the group would not be able to make bond payments due in three years’ time.
Akin said Highberry’s motives were “self-serving and without merit” and an attempt to simply transfer value from its shareholders to bondholders.
He added: “Colt’s solvency is evident from the information we have presented today. We have no doubts about our ability to have these claims dismissed.”
Colt revealed the threat from Highberry, part of New York-based hedge fund Elliott Group, a fortnight ago and argued at the time it had £1bn in cash and no bank debt.
Highberry is arguing that Colt is heading for “inevitable” insolvency and that its assets are almost worthless but Akin said he was happy for the dispute to be played out in the courts.
Colt’s results today were ahead of forecasts with underlying earnings up 203% on last year at £19.4m and capital expenditure £21m below the prior quarter at £90m.
Colt runs telecom networks in 32 cities in 13 countries across Europe, selling voice and data services to blue-chip firms and local government offices.
It announced 800 job cuts last month when revealing it would be writing down the value of certain assets by almost £550m to reflect the “realities of the market”.
Pre-tax losses before the one-off charge were £61.8m for the third quarter, which compares with pre-tax profits of £1.3m in the same period a year ago.
Shares in the group, trading at nearly £40 in early 2000, were up 3% or 1p at 31.5p after the update.
EGi News 24/10/02
