C&W has good day in court
Two out of three class actions dismissed
Cable & Wireless has succeeded in getting two US class actions dismissed by a court in Virginia. But it must continue to fight a third suit, filed in the US by non-US bondholders.
C&W today said it was unable to comment further on the court case without the Court Memorandum of Opinion setting forth the reasons for the orders.
The British telco and former chairman Sir Ralph Robins were accused in the suits of misleading shareholders over the sale of One2One, the UK mobile operator to Deutsche Telekom. C&W had agreed to indemnify DT against potential tax liabilities arising from the sale in the fantastic event that its credit rating ever fell to junk status.
But the unthinkable happened in December 2002 when Moody's downgraded C&W's credit rating to junk status. This was in response to C&W's ruinously expensive attempt to become the world's biggest web hosting company. The subsequent share price collapse forced C&W to 'fess up to the DT provision which meant it had to put £1.5bn into escrow.
In March 2003, C&W paid the Inland Revenue £380m to settle tax settle obligations arising from the sale of One2One.
This month, the group drew a line under its US Internet data centre business with the completion of its sale to Savvis for $155m in cash and $12.4m liabilities. It had put C&W America under bankruptcy protection to escape burdensome property leases. ®