PNC shareholders in last ditch effort to overturn sale

A group of shareholders in PNC Telecom, which was put into administration yesterday, pledged to launch an investigation into recent events at the company in a last ditch effort to save it.

The shareholders, who speak for nearly 40 per cent of PNC Telecom's equity, are trying to get hold of internal company documents, particularly regarding the recent sale of its chain of mobile phone shops - KJC Mobile Phones - and its fixed line telecoms business PNC Telecom Services.

They want to see if those documents would enable them to overturn the sale of those businesses - to a privately owned company called Vanguard - and have them returned to PNC Telecom.

One source said: "They [shareholders] will gain as many facts as they can and, ideally, that will enable them to start an independent investigation into recent events.

"It's very early days but one might look to get the transaction overturned and get those assets back to the company. The shareholders might then consider refinancing it. But in order to make an assessment of whether that is possible, they need to see the facts."

Shares in PNC Telecom were suspended from trading yesterday as the company confirmed it had applied to the High Court for an administration order.

The company, headed by chief executive Ian Gray, sold the KJC business along with PNC Telecom Services to Vanguard two months ago. Vanguard paid PNC Telecom £2m in cash and agreed to take on a number of liabilities including "bank debt, leasing finance, compromise agreement payments and all employment contracts".

The move left PNC without any trading operations - in effect turning it into a cash shell. But it has since transpired that its liabilities could exceed its assets.

A report by the accountancy firm Numerica, presented at an emergency company meeting last Friday, warned that PNC Telecom's liabilities exceeded its assets.

PNC Telecom said yesterday it had applied for the administration order "with a view to protecting the company's assets, which consist primarily of cash deposits".