Energis, the struggling telecoms company, yesterday refused to detail the level of hidden liabilities in its associate companies and joint ventures.
The company has a string of equity stakes in telecoms operations in the UK, the United States and Poland. It is feared Energis may face "put options" on some of these stakes, whereby the joint-venture partner may be able to trigger an obligation from Energis to buy out the remaining stake at a predetermined price and date. This could add to Energis' crippling financial woes, which forced the company to announce on Thursday that it might breach the covenants on its £725m overdraft.
As Energis shares fell another 25 per cent to 3p yesterday there was speculation there may be substantial liabilities on Eurocall, a voice telephony reseller based in Manchester, in which Energis acquired a 45 per cent stake for £20.25m in May 2000. Energis denied this yesterday, saying it had an option of first refusal to buy the remaining stake in December 2002. However, it refused to say whether put options existed in its other associate companies. "There is no obligation to purchase the rest of Eurocall. As for everything else, we're not going to comment," a spokesman said.
Energis owns 50 per cent of MetroHoldings, a network construction business held in partnership with France Telecom. It also owns 30 per cent in Broker to Broker Inc, an online American securities settlement service which trades as Omaris. It has a 23.75 per cent stake in Energis Polska, a Polish telecoms division. An Energis spokesman said yesterday that it was looking to sell these interests as part of its disposal programme to raise funds for its UK operation.
Energis said its banks were aware of the position of its associate companies. "They'll be aware of all these things. It is not in our interest to hide anything from them. We need their support."
In the last financial year Energis' associate companies accounted for £19m of related party sales, approximately 2 per cent of group revenue.
The comments came as Energis bondholders moved to form a negotiating group as credit rating agencies and analysts said the company would probably default on its debt. The group is expected to be formed and lawyers to be appointed within two to three weeks. The move is similar to ones made by bondholders in NTL, the British cable company and Dutch cable operator United Pan-Europe Communications. It will give the bondholders a stronger negotiating platform.
National Grid, which holds a 37 per cent stake, has said Energis could not rely on it for further financial support.