Energis pulls plug on German division
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Your support makes all the difference.The troubled telecoms company Energis yesterday pulled the plug on its German operation, Ision, after a buyer failed to emerge while confirming that talks over the future of its core UK business were still ongoing.
The company, which last month shut its Swiss operation, said it had become clear that a sale of Ision, which employs about 800 staff, was "unlikely".
Consequently, it said it had decided to stop funding Ision, which will now start insolvency proceedings, in the interests of preserving cash resources. It is thought the UK telecoms group BT had cast its eye over Ision.
Despite the move, Energis said its banks were continuing to support its UK operation.
It said "constructive discussions" with banks, bondholders and potential investors were now proceeding towards a recapitalisation or a sale of the UK business.
But either route, it warned, would "at best" lead to "significant" dilution for shareholders. The UK business is expected to be sold to a venture capital firm or carry out a debt for equity swap.
It is thought two bids have been submitted for the UK business, including one from a consortium led by Apax Partners and Carlyle, tipped to be the preferred bidder, and another from Permira.
Banking sources said last night they thought the company might manage to resolve the UK business' future by the end of this month.
Energis, which put its European businesses on the chopping block earlier this year, said it was continuing to support its business in the Netherlands while discussions on its disposal continued. It also said it was continuing to explore its options for its Polish joint venture Energis Polska.
While Energis said Ision and its subsidiaries were likely to make claims against the company, it said the German business' insolvency was not expected to have a material effect on the core UK operation.
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