Court dismisses bondholder bid to see Colt papers

Highberry, the rebel bondholder in Colt Telecom, lost the first stage of its battle to force the telecoms company into administration yesterday after the High Court ruled against its request for further financial information about the company.

The US hedge fund, which owns an estimated £75m worth of Colt bonds, had been trying to get access to more detailed information about the company's wellbeing and had also asked to cross-examine Steve Akin, Colt's chief executive.

Mr Justice Collins ruled yesterday, however, that the requested documents contained confidential and sensitive information not available to other Colt shareholders. "If they need the documents to respond to Colt's position, then I consider that they are simply fishing for information or documents to bolster their position," Mr Justice Collins said.

The twist comes a month after Highberry petitioned the High Court to force Colt into administration, claiming it would not be able to repay or refinance bonds due in the future.

Mr Justice Collins said Highberry had asked for a "breathtaking" array of documents including cash flow forecasts to 2009, copies of board meeting minutes and communications between Colt and its auditors. He also rejected Highberry's request to cross-examine Mr Akin, who has vociferously defended Colt's financial position and future.

Despite the setback, Highberry remained undeterred and plans to press its case. A three-day court hearing is expected to take place next month.

Shares in Colt closed down 6 per cent, or 3p, at 45p yesterday. The stock had fallen as low as 28p after Highberry's intentions first came to light in early October but since rallied to almost 50p.

Highberry, which says it has lost faith in Colt's balance sheet and forecasts, has alleged Colt will not be able to repay or refinance its £1.2bn of bonds when they become due between 2005 and 2009.

But Colt has dismissed those claims as "ludicrous" and "without merit" and says there is "no basis whatever" for the firm's action which, it believes, is "entirely without foundation".

"The board is confident that Colt will be able to repay or refinance its bonds when they fall due," the company said last month. "The board will take whatever steps are required to protect the interests of its stakeholders against this self-serving attempt to force an unjustified transfer of value from shareholders to bondholders."

Highberry is part of the New York-based hedge fund The Elliott Group that successfully sued the Peruvian government in 2000 over debts.