Hedge Fund Reader : Hedge Funds not happy with Cable & Wireless deal

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August 22, 2005

Hedge Funds not happy with Cable & Wireless deal

Hedge funds seem to be annoyed with the extremely low valued deal that Cable & Wireless seems to be offering Energis. The deal is reportedly for £780 million. A group of debt holders of Energis, holding 25% of the C tranche of debt are hoping to prevent this deal by appointing Close Brothers to act on behalf of them. Elliott Management which is the company’s largest shareholder and the banks that own Energis debt are apparently quite pleased with what C&W is offering. However the holders of C debt are understandably quite unsatisfied with the price being offered as the remittance to them would only be 80p in the pound. They feel this amount is quite low when seen in the light of the synergies that C&W will enjoy by acquiring Energis and its customers. Consolidation these days seem to be the buzz word with the bigger and stronger players acquiring the smaller ones and profiting from the sheer size and reach. Earlier C&W had offered only £500 million for the deal and in a year this amount has been increased to £780 million. As such, the debt holders feel that the amount can certainly be increased in order to meet their expectations. Businee.timesonline.co.uk reports:

“Consolidation in the corporate telecoms arena, where there is fierce competition, is now regarded as essential. While C&W could seek tie-ups with other targets none would give it the scale to fight against BT as Energis would, the debt holders will say.”