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Und tschüß... Energis plunges as says unable to comply with banking covenants Shares in cash-strapped Energis (UK:EGS), the UK-based telecoms network provider, plummeted on Thursday after it said it expected to be unable to comply with some of its banking covenants and its major shareholder National Grid (UK:NGG) said it should not count on further financial support. Energis said it was meeting with its banks to make proposals to amend the covenants and to draw down funds from a facility that would improve the liquidity of its UK operations. It would actively pursue the disposal of its continental European businesses, it said. The company said it would cut costs by £25m a year and shed 400 jobs in the UK. Energis shares had been up 13 per cent on Thursday on a Financial Times report of the impending sale of businesses but fell 45 per cent to 7.25p after the company`s announcement. Energis shares drop 60% on restructuring plans By Maija Pesola in London and Thorold Barker in New York Published: February 20 2002 19:34 | Last Updated: February 21 2002 12:30 Shares in Energis dropped more than 60 per cent in value on Thursday after the struggling telecommunications carrier confirmed that it would breach its banking covenants and announced restructuring plans, including selling its lossmaking overseas businesses to raise cash. In addition, the plan - the result of a four-week strategic review initiated in January- will see the company will cut 400 jobs at its core UK division. These come on top of 450 job losses already announced last year. The company is looking to save £25m ($35.6m) a year in operational expenses at the unit, and hopes to return the division to cash-flow positivity during the next financial year, to March 2003. The UK business accounts for about 75 per cent of overall revenue. Energis said it was meeting with its bankers on Thursday to discuss amending covenants on the £725m banking facility it arranged in November. Leading banks in the syndicate are Barclays Capital and Dredner Kleinwort Wasserstein. The company is hoping to arrange an additional draw-down of funds to provide liquidity for the UK business in the short term. However, the company said it was considering a number of other options for long-term financing, including restructuring its bonds. Energis said it had been told by the National Grid, its largest shareholder, that it will not guarantee any additional financial support to the company. It also revealed on Thursday that two executive directors, Bob Taylor and John Beaumont, had resigned. The shares lost more than 62 per cent, hitting a new low of 5p following the announcement. Selling the overseas businesses will be a significant U-turn for Energis, which has spent about £1bn on its European presence and only last year beefed up its German operations with the purchase of Ision, a web-hosting company. But Energis is believed to have been left with little choice as it struggles to regain the confidence of its banks following a shock profits warning in January. That was the third in six months and was accompanied by news that it was in danger of breaching banking covenants only weeks after signing up to the new banking facility. Interessant: The company has spent about £1bn on its European businesses and bought the Ision web hosting business in Germany last year. In a note before the announcement, Bear Stearns said it might upgrade its "unattractive" rating on news of the potential disposal of European assets. It said the UK business could be worth 40p a share and should report positive earnings before interest, tax, depreciation and amortisation (ebitda) for the year to March of £164m. But it advised caution and said the major risk was that there were no obvious buyers for the European assets. gruss, BigBlender |
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| aus der Diskussion: | ENERGIS strong buy |
| Autor (Datum des Eintrages): | BigBlender (21.02.02 13:40:57) |
| Beitrag: | 12 von 15 (ID:5641507) |
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