Energis pulls plug on Swiss operation

The troubled telecoms firm Energis yesterday pulled the plug on its Swiss operation in a frantic move to conserve cash while confirming discussions were still ongoing over the sale of its German and Dutch operations.

While the company said it remained committed to its UK operation, it reiterated that its continental European businesses were on the block.

Energis Switzerland, it said, was expected to file for the opening of insolvency proceedings "in the interest of preserving cash resources". That business needed "significant" funding which Energis considered would "outweigh any probably sale benefits".

However, it said that it would continue to support both its German business and its operation in the Netherlands while discussions with potential buyers continued.

It is thought that BT could be a buyer for the German division while private-equity firms including Apax, KKR, Carlyle and Permira are said to have shown interest in Energis' UK operation.

Energis said that its lending banks had shown their support for the UK business and continued to provide funding ahead of the company's restructuring plans.

The move comes almost three weeks after Energis refused to make a £14m interest payment on certain bonds.

Any restructuring package is expected to see either the company's bondholders seize control of the business in a debt for equity swap or a venture capital business taking control after agreeing to a deal with the bondholders.

While the company refused to comment on how the restructuring was progressing, it confirmed yesterday that it was continuing to hold discussions with bondholders.

"Ultimately you can't see any other way than serious dilution for equity investors, whatever happens. I find it difficult to see another way out of it," said Kevin Fogarty, an analyst at Teather & Greenwood.