Clutching at straws
The trading of shares in ISP Tiscali was suspended today after it announced the failure of negotiations with BSkyB to buy its UK assets on Friday and appealed to creditors to suspend claims while it tries to restructure its debt. The resulting plunge of 40 percent in Tiscali's share price this morning is what prompted the suspension.
Tiscali first made its UK assets available for purchase in May 2008 but there was little initial enthusiasm. Eventually BSkyB started sniffing around but by the end of the year there had been no progress.
"Given the time frame of the negotiations with BSkyB for the disposal of certain UK assets of the Tiscali Group, which have not resulted in an agreement to date, due to the worsening of the market environment in which the potential buyer also operates, the Board of Directors has acknowledged that it is de facto impossible to proceed with the above mentioned negotiations," said the Tiscali statement.
"...the Board of Directors has resolved upon the preparation of new Business and Financial Plans allowing the Tiscali Group to commence a process aimed at restructuring the financial debt and at guaranteeing the long-term financial equilibrium. While preparing these Plans, the Company intends to ask for a period of suspension of payment of interests, capital and financial covenants, in order to achieve the above mentioned objectives."
As the owner of Tiscali, Pipex, Nildram and Freedom2Surf in the UK, Tiscali has a lot of broadband subscribers to offer any potential purchaser, but it would be fair to assume that even if it does eventually sell its UK assets, it will be at a fraction of the price it was hoping to get last May.
