Grabiner ready to make bid for stricken Energis

Click to follow
The Independent Online

Energis, the stricken telecoms group, revealed yesterday it had received inquiries from potential buyers as speculation grew Michael Grabiner, its former chief executive, was preparing to mount a bid.

The company, which is in danger of breaching its banking covenants, admitted it had been contacted by several interested parties but denied these amounted to a more formal takeover approach.

Mr Grabiner is understood to have contacted Energis's advisers, Goldman Sachs and Dresdner Kleinwort Wasserstein, with the news that Apax Partners, the private equity company he joined earlier this month, was interested in bidding for the business.

An Energis spokesman said: "We have had some interest in parts of the organisation," but he declined to be more specific. Apax is thought to be one of a number of private equity firms that are weighing up making a takeover approach.

Apax's interest comes as Energis, once one of the most highly regarded companies in the sector, battles to stave off insolvency. Energis's shares sunk 77 per cent last week to just 3p after the telecoms carrier admitted it was faced with a fundamental financial restructuring and a cash shortfall. Fears grew that its bankers could force the company into administration in order to get their £600m of loans repaid.

Any move from Mr Grabiner to table a bid is likely to be controversial because it was under his leadership the telecoms carrier made a string of acquisitions at the top of the market. Mr Grabiner left Energis last May as its shares, which were once worth 800p, began to collapse.

According to weekend reports, any offer for Energis is expected to involve a nominal bid likely to be less than 5p a share and an offer to buy the company's bonds at a deep discount. The bonds currently trade on the debt markets at just 15 per cent of their face value. An offer is also likely to depend on Energis's bankers agreeing to write off part of their loans to the company, making the total cost of an offer less than £1bn – about the same as Energis's annual sales.

Energis said last week it would retreat from continental Europe after its loss-making businesses there, in which it has invested £1bn, led to it breaching the terms of a recently-agreed loan. The emergency restructuring plan also included 400 further UK jobs losses, on top of 450 already announced.

National Grid, Energis's former parent and still its largest shareholder with a 37 per cent stake, has said it could not be relied on for any financial support. Energis, a former FTSE 100 blue-chip stock, has lost 99 per cent of its value over the past year and faces relegation from the FTSE 250 Mid-cap when the index compiler reshuffles it next month. It is valued at just in excess of £50m compared with a peak of £14bn in March 2000.

This week the group will press ahead with negotiations with its banks to persuade them to rewrite its lending covenants and give it more cash. Analysts expect the banks, led by Barclays and Bank of America, to take at least three weeks to come to a decision.

Energis will also carry on searching for possible buyers for its European operations. Colt Telecom, a rival telecoms group, was reported to have approached Energis with a £40m offer to buy Enertel, its Dutch business.

Comments