Apax back in Energis talks after submitting fresh offer

The venture capital group Apax last night looked to be back in with a chance of gaining control of the UK business of the troubled telecoms company Energis after submitting an improved offer.

At the same time it emerged that an Apax-led venture capital consortium was looking to snap up the UK arm, formerly called Racal, of the collapsed US telecoms group Global Crossing.

The consortium plans to inject the old Racal business into Energis's UK business if it is successful in wrestling it from bankers and bondholders.

Ironically, Energis had originally tried to buy the Racal telecoms business back in the autumn of 1999 for about £750m but was pipped at the post by Global Crossing.

Energis will hold meetings this weekend with both the venture capital groups and the banks and bondholders to mull the various options. A decision on the company's future is expected next week.

Sources said that Apax had been called back to the negotiating table yesterday to see if a deal could be reached after some of the company's banks indicated they would be prepared to consider accepting a fresh offer.

It is understood that Apax was considering providing a cash injection of some £150m while asking the banks to write off some of their loans.

The venture capital house is thought to have put forward a new offer that paved the way for bankers to get more upside if the business met certain performance targets in the future.

But others close to the talks were yesterday insisting that a venture capital deal was still likely to fail. "No decisions have been taken but that [a venture capital offer] still looks unlikely," one City source said.

Until recently, it seemed the company's banks would gain control of the business and refinance it in an effort to preserve their existing investment.

Energis, which ran into trouble earlier this year after sales collapsed, has said that discussions with banks, bondholders and potential investors would proceed either towards a recapitalisation or a sale of the UK business.

In an effort to conserve funds, Energis pulled the plug on both its German and its Swiss operations after buyers for either of those businesses failed to emerge.