Bondholder petitions for Colt administration

One of Colt Telecom's bondholders yesterday petitioned the High Court to force the struggling telecoms group into administration, making good on threats made earlier this month.

Colt said there was no basis for the attempt by Highberry, a US hedge fund, to push the company into administration. Highberry has said it has lost faith in Colt's balance sheet and forecasts.

"The board of Colt welcomes the opportunity to demonstrate in court why Highberry's action is self-serving and without merit," it said in a statement.

Analysts have said it is unlikely Highberry would be able to push the cash-rich group into administration, given that the bonds in question are not due for another three years.

Colt said it was confident it would be able to repay or refinance its bonds, which fall due between 2005 and 2009.

The group's most recent balance sheet showed that on 30 June it had total assets worth £2.8bn and total liabilities of £1.7bn. It said it had cash of £1bn with no bank debt and its operational cash consumption was declining significantly.

Highberry is part of Elliott Associates, a New York-based hedge fund best known for successfully suing the Peruvian government in 2000 over debts.

Some funds make money by buying cut-price bonds in firms they believe are heading for administration but emerge as viable businesses the other side – delivering a big return.