Murtagh to take control of Smart Telecom
Construction magnate to the rescue
Millionaire entrepreneur Brendan Murtagh has offered to buy Smart Telecom for the grand sum of €1, as well as a 10 per cent stake in BidCo, the company formed to make the offer.
The disposal recommended by Smart's directors means BidCo will assume Smart's estimated liabilities of €40m.
Construction and property industry magnate Murtagh already owns just under 20 per cent of the seriously struggling telco, which had thousands of residential voice customers disconnected by Eircom during the week over a €1.7m debt owed to the infrastructure owner.
The proposed deal as it currently stands is structured so that Smart will be de-listed from the London AIM market and the firm's shareholders will be offered a 10 per cent stake in Murtagh's private company BidCo, which will become the new owner of Smart.
In a statement released on this evening, Smart said 42 per cent of its shareholders had committed to the deal. Around 80 per cent of shareholders will be needed to approve the transaction, which will be discussed at a Smart Telecom EGM expected soon.
The company's interim financial results for the first six months of 2006 showed fixed assets of euro;63m, liabilities of euro;60 million, and shareholder funds of euro;3.4m. Smart Telecom said its financial position had "deteriorated further" since June.
Ciaran Casey. Smart Telecom's acting chief executive - he replaced Smart's co-founder Oisin Fanning who stepped down for health reasons recently - said the proposed transaction would allow the company to continue to provide a full service to its corporate and residential broadband customers.
"While this represents a very disappointing outcome for all shareholders who have supported the company over many years, it is the only option to ensure that shareholders have an opportunity to get some value for their shareholding. The proposal put forward by BidCo will allow Smart to deal responsibly with all its creditors in due course and ensure that a newly capitalised Smart will continue to deliver to its many customers the most competitive corporate and broadband offering in the market," he said.
A Smart Telecoms spokesman was unable to confirm if a cash alternative would be offered to shareholders if the 10 percent stake in BidCo was not accepted.
As a condition of the sale to BidCo, five of Smart's current directors will resign from the company's board. They are Ken Barry, Ray King, Paul Sullivan, Maria Pearl Roche and Tormod Hermansen. Kyran O'Dwyer has been appointed acting Chairman until the transaction is voted on by the shareholders.
Smart has already reduced its headcount from 348 to 100, and last month announced its intention to concentrate solely on broadband rather than on its low margin voice, call card and payphone business units.
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