Telecoms firm Thus near deal on £160m funding

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The Independent Online

Thus, the former Scottish Telecom, is close to an agreement on a £160m fundraising that will tide the loss-making firm over until 2004.

The Glasgow-based telecoms firm, which also owns the the Demon internet service provider, is understood to be well advanced in discussions with potential external investors and its parent company, Scottish Power. William Allan, the chief executive of Thus, is said to hope he can announce the new financial package in November, five months earlier than expected.

Scottish Power, which owns 50.1 per cent of Thus, is believed to be ready to inject extra cash as part of the deal. Although it has encouraged Thus to look for additional sources of financing, it is thought to be supportive of the company's plans and has never ruled out the possibility of injecting extra financing itself.

When Scottish Power released its first-quarter results last month, David Nish, finance director at Scottish Power, refused to say whether the company would help Thus out: "We are encouraging them to look externally. It is a decision for the second half of the year [to March]." Mr Nish also sits on Thus' board in a non-executive capacity.

Sources said Thus was hopeful of being in a position to clarify its funding issue in November, well ahead of its March deadline. "The inclusion in the funding mix of some external investors is what they're exploring," said one source.

An announcement is being pencilled in to coincide with the announcement of both Scottish Power's and Thus's six- month results. Thus is also thought to be hopeful of having sold off its interactive division by then, with analysts expecting it to fetch around £10m.

While the funding deal has yet to be officially signed off, the £160m facility is forecast to take Thus through to becoming cash-flow positive, now expected in 2004, a year earlier than projected. The company estimates its existing facilities will last it until around September of next year – a quarter longer than originally forecast.

Last autumn, Scottish Power extended the company's £220m working capital facility, put in place at flotation, by £100m.

Shares in Thus, which floated in November 1999 at 310p each, surged as high as 844.5p at the peak of the Internet boom. The stock, along with the rest of the telecoms and technology sectors, has since dropped and is trading close to its lowest point at 39p.