Shares in the troubled German telecoms company MobilCom plunged 56 per cent to €2 yesterday as investors fretted France Telecom may walk away from the business, consigning it to bankruptcy.
Directors of the French group are due to attend a key board meeting today to decide, among other things, whether to continue trying to thrash out a deal to save MobilCom.
France Telecom, which owns 28.5 per cent of MobilCom, has held months of talks with Gerhard Schmid, MobilCom's founder who speaks for about 50 per cent of the equity, and its banks.
Those discussions, however, have been extremely acrimonious and a deal with Mr Schmid, who is pushing for France Telecom to make an offer for the shares, has still not materialised.
Nevertheless, MobilCom, which ousted Mr Schmid as its chief executive three months ago, insisted yesterday that it had no reason to believe France Telecom was considering pulling the plug.
"MobilCom's supervisory and management boards assume that the partnership with France Telecom will continue. The supervisory and management boards are not aware of any facts which would indicate that the partnership has been terminated," the company said.
Furthermore, MobilCom insisted that France Telecom was obliged to continue funding it under a previous agreement and threatened legal action if it pulled out.
"Up until now, France Telecom has met these commitments, despite its – in MobilCom's view illegal – abrogation of the agreement," it said, adding: "Claims for damages will be unavoidable if France Telecom fails to fulfil its financial obligations."
An announcement on MobilCom's future could come as early as today.
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