A consortium including Esat Telecom last night secured a High Court order preventing the sale of Cablelink to a US company, NTL Incorporated, for a sum believed to be more than £470 million (€596 million).
At a night hearing in the home of Mr Justice O'Donovan, Howberry Lane Limited, of which Esat owns 50 per cent, alleged that NTL had submitted an invalid tender for Cablelink in that it did not submit an offer in Irish pounds but instead offered to pay 15 per cent more than the highest bidder.
Howberry also claimed that Mr John Gregg, chief operations officer of NTL, at a meeting in New York one week before final bids were to be submitted, asked it to co-operate with NTL "and effectively fix the bid price".
Mr Denis O'Brien, chairman of Howberry Lane Limited, a company formed by Esat, Charter Communications LLC and Vulcan Cable Investments in order to bid for Cablelink, said that Mr Gregg suggested that by involving all bidders in a consortium, they would be in a position to fix the price at a greatly-reduced figure.
He was "astounded" by that approach by Mr Gregg "which I considered to be wholly unethical and to be at complete variance with the spirit and letter of the sale process" which had been laid down by Telecom Eireann and RTE, owners of Cablelink, through the medium of their agent NM Rothschild & Sons Limited, Mr O'Brien said in an affidavit.
Mr Justice O'Donovan granted injunctions restraining Telecom Eireann and RTE from selling or purporting to sell Cablelink to NTL or to any other prospective purchaser which had calculated its final bid by referring to a formula rather than a monetary amount. The orders are returnable tomorrow.
The judge said he would grant the orders on the basis of a letter from Rothschild of January 1999 which said that offers for Cablelink from interested bidders should be stated in Irish pounds and because Mr O'Brien had been told by Mr Jonathan Paine of Rothschild that one bidder had submitted a purported final bid which did not specify a particular monetary amount but simply said the bidder was willing to pay 15 per cent more than the highest bidder for Cablelink.
The judge noted a £471.5 million bid for Cablelink, which was stated by Rothschild to be the highest bid, was actually 15 per cent higher than the £410 million bid from Esat, the second highest bidder.
Applying for the orders, Mr Bill Shipsey SC, with Mr Lyndon MacCann, for Howberry, said his client had tendered for Cablelink for a stated monetary amount and understood from letters from Rothschild that all bids had to be in fixed Irish pounds.
He said Rothschild had said final bids should be submitted by April 23rd and Howberry made its final bid of £410 million by that date. Having made that bid, they were told by Mr Paine one bidder had submitted a purported final bid simply saying it would pay 15 per cent more than the highest bidder. He believed this was NTL.
The parties were then told that revised final bids were to be submitted on April 27th "expressed as a fixed number of Irish pounds" and that "formula bids" would not be accepted.
This undermined the notion that bids submitted on April 23rd were to be treated as the capital for the final bid.
This attempt to give NTL an opportunity to cure the fundamentally-flawed nature of its original final bid was wholly at odds with the promise of transparency and openness made by Rothschild in previous letters.
