Banks bail out Energis
July 17, 2002
Struggling telecoms group Energis was bailed out by its banks today in a move that sees former
Asda boss Archie Norman chairing the company.
The Conservative MP has been brought in after Energis's 16 banks bought the company's UK operation in a complex financial restructuring.
Mr Norman said the widely expected deal provided an opportunity "to rebuild a strong business for the customers, employees and investors".
The banks have set up a new company called Chelys, which is injecting £150 million into Energis UK, with a base in Forbury Road, Reading, and drawing up new banking facilities.
Energis's Dutch operation is set to be sold while the future of the group's Polish joint venture is still unclear.
The telecoms group warned earlier this year it was at risk of breaching its banking covenants after running up debts of more than £1 billion.
The banks have converted their loans into a controlling stake while Energis's bondholders and shareholders will own 8.25 per cent voting rights in the business.
Today's move follows the banks' rejection of an approach by venture capital firms Carlyle Group and Apax Partners for Energis earlier this month.
Mr Norman was linked to an earlier venture capital bid and kept in touch with the consortium of banks during the recent talks.
He said today that financial security for the business and "the prospect of building a great team" were his conditions for helping out.
Yesterday's deal came after shares in Energis were
suspended on the London Stock Exchange at just 0.90p, a far cry from 771p in early 2000.
Energis Plc was placed into administration with Ernst & Young to enable the sale of the core UK business to the bank consortium.
Energis UK's new capital structure has to be approved by 75 per cent of the Plc's creditors at a future date.
Shareholders will only be able to secure some cash if a sale or flotation of the business realises in excess of £1.8 billion in the next seven years.
It is unclear if Energis's chief executive David Wickham or finance director Bill Trent will stay in their positions.
Energis' UK arm supplies a host of blue-chips with voice, data and web-hosting services and recently won deals with Virgin Mobile and Eurostar.
The operation, which employs 2,000 people, posted underlying earnings of £88.5 million in the half-year to September 30 on revenues of £369.4 million.