Energis revenues 'still falling' as new team fails to stop rot

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The Independent Online

Revenues at the debt-ridden telecoms supplier Energis are still declining, according to industry sources. The warning comes as speculation mounts that the 16 banks that own the company are looking to offload their holdings. The company denies this.

Revenues at the debt-ridden telecoms supplier Energis are still declining, according to industry sources. The warning comes as speculation mounts that the 16 banks that own the company are looking to offload their holdings. The company denies this.

The company was rescued from administration by its banks in 2002 and is now run by the ex-Freeserve boss John Pluthero and the Conservative MP Archie Norman. But it is understood that the new management team has not been able to stem the decline in revenue, despite reporting the company's first operating profit last year.

Mr Norman, Energis's chairman, is in line for a potentially huge bonus. Along with the rest of the management team, he could cash in if the restructured company is refloated or sold at a high enough value to repay the banks that now own it. Energis owes around £700m to its banks, which injected a further £150m in equity when they assumed ownership in the summer of 2002.

Mr Norman's bonus could be as high as £30m if Energis were sold for £1bn or more, one source claimed. Such a sum is unlikely at present, though, given the company's uncertain future.

Mr Norman denied he could receive a payout this high, but admitted: "Like any private equity group, there is an incentive package which is distributed across the management team. I am part of that. I am sad it's not of that number [£30m]. It's based on how much value we generate. It's long term."

Energis reported revenues of £745m in the year to 31 March 2004, down 3 per cent from £770m in the previous year. But it is understood that when it files its next accounts for the year to 31 March 2005, revenues could be as low as £710m, due to competition for customers and falling demand for its dial-up services.

An Energis spokeswoman said that revenues in its core voice and data division were up 20 per cent on 2003 for the year to last October. Mr Norman said the company was growing "rapidly" but admitted that overall revenues were "pretty flat".

Three of the 19 banks that originally backed the company's restructuring have sold their stakes to the Elliott Group, a hedge fund, it emerged last month. Industry sources have speculated that the remaining banks could also offload their positions.

Mr Norman said some of the banks were trading their debt, but denied rumours that they were looking to unwind their positions. "From time to time, people trade debt. The core holders remain core holders. The business is not for sale."

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