Colt Telecom riding high after funding scare ends
Shares up 43 per cent
Colt Telecom has dramatically recovered from funding worries today with the announcement that major shareholder Fidelity is to increase its stake from 47.7 per cent to 54 per cent.
Colt said this morning it was planning to release 650 million new shares at 62 pence each in order to raise enough money for business expansion - which promptly gave the City the jitters. However, once Fidelity stepped in to say it would take its full allocated stake, the telco's share price has reached a year-high, rising 43 per cent.
Colt - like virtually all telecoms has seen its share price drop over the last year, precipitously in the last month. Investors were being advised to sell the shares and the company dropped out the FTSE 100 index as a result. The company responded by going on a massive bond buy-back, buying £115 million of its own bonds on 3 September and a further £30 million four days later, reducing net debt by an estimated £60 million.
Fidelity's vote of confidence has also raised hopes that other institutional investors will pay for their allocated stakes.
Colt plans to use the money to complete its network expansion across Europe. Less than a week ago, the company said Copenhagen and the Hague had been added to its network. It plans to have 32 city networks in Europe in place by the end of this year. ®