Marconi rump fights hedge fund over sale

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The Independent Online

Telent, the rump of the former UK industrial giant Marconi, is trying to stop the US hedge fund Polygon scuppering a £346m takeover of the company.

The Telent board is urging institutional investors who have lent stock to Polygon to recall the shares and vote them in favour of the sale to Holmar Holdings, an acquisition vehicle controlled by Fortress Investment Group.

Telent was forced to postpone a meeting yesterday to approve the takeover after Polygon said it intended to use its 24 per cent stake to block the deal.

Polygon owns only 10.13 per cent of Telent, but has borrowed a further 13.81 per cent from other shareholders through contracts for difference, giving it the right to vote the shares but not the economic interest. The combined stakes provided Polygon with a large enough stake to block the takeover. Polygon also tried unsuccessfully to block the refinancing and stock market return of British Energy.

John Devaney, the Telent chairman, told yesterday's meeting: "The board urges all investors who have entered into arrangements to lend their Telent shares to third parties but retained the economic interest to recall these shares." Telent's financial advisers Morgan Stanley and Lazard are contacting these investors over the coming weeks with the same message. The meeting has been reconvened for 2 August.

Polygon has built its stake over the past six weeks after the Fortress bid was announced. It initially approached Fortress about joining the bid, but was rebuffed. Polygon is not interested in bidding for the entire Telent business but is believed to be interested in releasing some of the £490m Telent holds in an escrow account relating to its pension fund.

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