The telecoms firm Colt Telecom is set for an uneasy meeting with shareholders today when it puts its controversial £400m fundraising plan to the vote.
Investors have been urged to reject a resolution being tabled at the extraordinary general meeting that will enable Fidelity, its biggest shareholder, to bypass normal Stock Exchange rules and increase its stake in the company without having to make a bid.
"We advise opposition to the waiver of takeover rule 9," said Stuart Bell, research director of PIRC. "Our basic objection is that it [Fidelity] is achieving majority control without paying a premium to existing shareholders."
Under the terms of the fundraising Fidelity, the investment firm which founded Colt and which still owns 47.7 per cent, could end up with between 54 per cent and 72.7 per cent.
However, while analysts believed some Colt shareholders might vote against the deal, they thought most of them would vote in favour, given that the company needs the extra cash to support its business plan and there is no alternative fundraising option on the table.
"We're supportive of the plan, and we're really not that concerned by the Fidelity issue," said one shareholder who did not want to be named.
Colt, which unveiled the funding plan last month, is hoping to raise the £400m through an offer of 649.4 million shares at 62p each. Should the exercise go well, it could end up with as much as £516m.
Shares in Colt have risen 82 per cent since the announcement was made on 22 October although that is still well beneath the £40 the stock traded at during the internet boom.
Assuming the plan is accepted at today's EGM, shareholders, who can apply for 92 offer shares for every 100 ordinary shares they hold, have until 27 November to submit applications. The new stock is due to start trading on 3 December.