Judge throws out bondholder's attempt to have Colt Telecom wound up

The telecoms company Colt Telecom yesterday won its High Court battle against the rebel bondholder Highberry, which had been trying to force it into administration.

The judge, Mr Justice Jacob, said: "There is not, and never has been, any substance whatever in their [Highberry's] petition. It should never have been launched."

Earlier this year, Highberry, part of the New York-based hedge fund group The Elliott Group, alleged Colt would not be able to repay or refinance its £1.2bn of bonds when they became due between 2005 and 2009 and petitioned for the firm to be put into administration. Colt had always insisted, however, that it would be able to repay or refinance the bonds and dismissed Highberry's claims as both "ludicrous" and "without merit".

Shares in the company closed up 5 per cent at 43p after the court ruled in its favour. They were buoyed further by the purchase of nearly 100,000 shares by four directors.

Steve Akin, Colt's chief executive, said: "This victory is not just important for Colt but for other companies financed with public debt. It should serve as a warning to other vulture funds that they will not be allowed to disrupt capital markets in this country."

He added: "We are obviously delighted with the decision of the court, and we now intend to continue with the important business of running the company and serving the interests of all our stakeholders."

Highberry, which owns an estimated £75m of Colt bonds, said it was still worried that Colt might end up in financial trouble. It said it remained concerned the company would "follow the majority of European alternative telecommunications companies and be forced either into insolvency proceedings or a balance sheet restructuring, either of which will result in substantial impairment for creditors". It said, however, that it looked forward to receiving interest payments on its bonds and said it hoped that "the confident predictions of the directors in reaffirming the company's solvency and closing the door on a bond restructuring will prove justified".

Mr Justice Jacob refused Highberry permission to appeal and ordered it to put aside £1.1m to cover potential costs from the case.