One.Tel goes belly up
Published: 30 May 2001 08:40 BST
One.Tel has appointed administrators and notified the Australian Stock Exchange of a suspension of trading prior to the market opening this morning, following the revelation that a capital raising of AU$132m (£48m) would be insufficient to keep the company solvent.
And union officials, in meetings with One.Tel, have hit a brick wall in seeking assurances about the fate of the troubled telco's staff. The Community and Public Sector Union (CPSU) met with One.Tel secretary Alicia Parker today only to be told "it's in the hands of the administrator".
"Our concern at the moment is that people continue working only to find out next week that they aren't going to get paid," CPSU organiser Sean Rahui told ZDNet.
Late today, the Australian Securities and Investment Commission launched an investigation into One.Tel, following the referral of information from the Australian Stock Exchange and concerns raised by James Packer and Lachlan Murdoch, who claim to have been misled about the telco's solvency.
The union has also requested a formal announcement be made to One.Tel's 1400-plus staff nationwide.
"At this point no announcement has been made to staff other than 'it's business as usual'," Rahui said.
That message was sent to staff by email yesterday.
The CPSU is also anxious that provisions are made for workers' entitlements, including accrued holiday pay and superannuation.
"We're not expecting the best," the CPSU's Stephen Jones said. "Employees are unsecured creditors, they stand back in the pack when ensuring debts are paid."
The CPSU is now seeking a meeting with One.Tel's administrator Ferrier Hodgson, which said today: "We will review One.Tel's operations and hold discussions with its major creditors to identify the best means of maintaining value for the benefit of its stakeholders. In the interim, One.Tel will continue to trade as a going concern."
One.Tel shareholders James Packer and Lachlan Murdoch said they are angry at being misled about One.Tel's cash position in the wake of the telco appointing administrators.
"Like all shareholders we are angry," chairman of Publishing & Broadcasting, James Packer, and News Limited chairman Lachlan Murdoch, said today.
"We have been profoundly misled as to the true financial position of the company."
The Packer, Murdoch duo said that the financial position of the company was not reported at Board meetings.
"The Board was advised on 17 May that the proposed AU$132m rights issue was prudent but not essential. However, ten days later, due diligence by the company's auditors revealed that the AU$132m rights issue would still be significantly insufficient to assure the company's solvency," they said.
Australian Shareholders Association, executive officer Tony McLean, said it was hard to say what lies in store for shareholders at this stage.
"In general shareholder interests are ignored and those of the creditors are represented when a company goes into administration," McLean told ZDNet.
"More often than not it simply signifies to shareholders that they've blown their dough."
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