One.tel Undervalued By At Least $90m: Rich
Sydney Morning Herald
Wednesday June 20, 2001
One.Tel's founder has accused the phone company's administrator of failing to get the best returns for creditors by undervaluing assets, including prepaid advertising from the Packer and Murdoch companies.
Mr Jodee Rich said the administrator Mr Peter Walker of Ferrier Hodgson had attributed ``nil value" to advertising credit that Mr Rich believed could be worth $90 million.
In a letter to Mr Walker from the law firm Ebsworth & Ebsworth, sent yesterday, Mr Rich asked what the administrator had done ``by way of any demand or action" to maximise the return from the prepaid advertising.
Such action would be against the Packers' Publishing and Broadcasting Ltd (PBL) or the Murdochs' News Ltd, which received $150 million upfront from One.Tel for five years of advertising as part of their 1999 deal to invest $700 million.
The two media companies, whose chairmen Mr James Packer and Mr Lachlan Murdoch are One.Tel directors, effectively assumed control of One.Tel when Mr Rich and his partner Mr Brad Keeling left the board on May 17. The board appointed Ferrier Hodgson as external administrators on May 30 because One.Tel was insolvent.
Mr Rich, through his lawyers, also claimed yesterday that there ``may be a significant error, inaccuracy or omission" in Mr Walker's estimates of One.Tel's deteriorating cash position between December 2000 and April 2001. Based on his inspections of the cash book balance, Mr Walker said One.Tel could have had working-capital problems from the end of December.
But Mr Rich said he believed those figures to be wrong because they appeared not to take into account other cash funds of the group, including funds on 24-hour deposit. By his reckoning, One.Tel had $104.1 million cash in December, shrinking to $38 million in April.
Mr Rich has also queried why the administrator made no provision for likely proceeds from selling One.Tel's European businesses that, at one stage, he thought could bring more than $200 million. A report in the Financial Times yesterday said Centrica was a frontrunner for the operations, with an offer of #61 million ($166 million).
The administrator refused to comment on Mr Rich's claims, which include questions relating to estimates about liabilities. Mr Walker estimated there could be a shortfall of $862 million, based on getting $189 million from selling assets and collecting outstanding debts.
UK One.Tel could raise $164m Page 28
© 2001 Sydney Morning Herald
Share This