A "secret deal" for the sale of Cablelink to US-based NTL Communications effectively turned an offer to submit "final, final bids" for the company into a "charade", it was claimed at the High Court yesterday.

Telecom Eireann's "hostility" to its "aggressive" competitor, Esat, may have influenced the process surrounding the proposed sale of Cablelink, Esat chairman Mr Denis O'Brien also alleged.

Tomorrow's deadline for acceptance of NTL's offer in excess of £525 million (€666 million) for Cablelink has been extended to 5 p.m. tomorrow, lawyers for NTL disclosed.

It was the second day of the hearing of an application by Howberry Lane Limited - the Esat-led consortium formed to acquire Cablelink - for an injunction until the trial of the action restraining the sale of Cablelink to NTL or to any other party on the basis of a "formula bid" rather than a stated monetary amount.

In proceedings against Telecom, RTE and NTL, Howberry claims its April 23rd bid of £410 million for Cablelink was the highest legitimate bid on that day and NM Rothschild, which was handling the sale for the Government, was not entitled to seek revised final bids on April 27th. It claims Cablelink should be sold to Howberry or the bidding process restarted without NTL.

In submissions yesterday, Mr Bill Shipsey SC, for Howberry, said that while RTE and NTL had in affidavits denied that hostility by Telecom towards Esat had influenced the bidding process for Cablelink, Telecom itself had made no such denial.

Three criteria have to be met to secure the type of injunction sought. These are:

there is a fair issue to be tried;

the balance of convenience favours the granting of the order and;

damages are not an adequate remedy.

Mr Shipsey said there was at the very least an issue whether the agents (NM Rothschild) for the sellers of Cablelink were entitled to change the rules of the bidding process retrospectively and without notice to the other parties. He argued the bidding procedure was unfair and said there was effectively a "secret deal" agreed between Rothschild's and NTL over the weekend of April 24th/25th last, which made a "charade" of revised final bids on April 27th. The other bidders were only told to submit their "final, final bids" on April 26th and NTL had an unfair advantage, he said.

He argued that Esat would be much more prejudiced should the order not be granted because it would lose all opportunity of acquiring Cablelink. On the other hand, NTL might only have to defer the acquisition.

Mr Shipsey presented seven additional affidavits to the court during yesterday's hearing. In his affidavit, Mr O'Brien, also chairman of Howberry, said it was told from the very outset the sale process would be fully transparent but that was not the case.

Mr O'Brien said NTL had confirmed it had offered to pay 15 per cent above the highest offer for Cablelink on April 23rd, the day when final bids were initially made. But NTL had put a cap of £525 million on that offer and this fact was not disclosed.

Between April 23rd and April 26th, when the five remaining bidders were asked to submit revised final bids by April 27th, there must have been communications between Rothschild and NTL if only to inform NTL of the amount they were deemed to have bid. That was £471.5 million - 15 per cent above Esat's £410 million offer.

Mr O'Brien said it was fundamentally unfair of Rotschild to have disclosed the amount of the Howberry bid and of the NTL referential bid in its April 26th letter. He also said his allegations that NTL was involved in attempts to fix the bid process were made to show that NTL was prepared to manipulate the sale process for their own commercial ends. He further alleged that Mr John Gregg of NTL had told him last month that NTL would like to buy Esat.

Ms Carol O'Connor, a consultant retained by Esat to advise on the purchase of Cablelink, said she told Mr Jonathan Paine of Rothschild's in a phone conversation on April 26th that it was unfair to disclose the two highest bids to all five bidders.

She said Mr Paine had replied that: "It's in your favour we can't accept the highest bid" but then qualified himself to say: "It's not a runner to go with you because we can't accept the higher bid". She understood that to mean, while the vendors believed they could not accept the formula bid, neither would they accept How berry's bid.

In his affidavit, Mr Paine said he did not materially dispute the substance of Ms O'Connor's version but did not believe her affidavit was a true reflection of their discussion. Mr Paine said Telecom Eireann and RTE were not subject to any legal restrictions regarding the sale of Cablelink. The tendering procedure was aimed at securing the maximum price but the vendors had no obligation to accept the highest bid or any bid.

A letter from Rothschild's of January 29th last outlining the bidding process had mistakenly said the vendors reserved the right to vary the procedure "with notice". This should have read "without notice" and was a typographical error which would have been evident from considering other documents and letters.

He had informed NTL over the weekend of April 23rd that its bid was the highest but did not inform it of the identity of the second highest bidder (Howberry). The terms of NTL's offer for Cablelink did not permit the disclosure of the £525 million cap on the offer and could have led to NTL withdrawing from the sale process.

Mr Paine said Howberry's own bid of April 23rd could have been disqualified because it failed to confirm a date when it expected the sale to be completed.

Another bidder had said it would consider paying £10 million more than the highest bid and he would have advised not to sell to Howberry but to initiate a further bidding process or negotiations, Mr Paine said.

He added that he never saw evidence of hostility by Telecom towards Esat. He believed Howberry's claims were groundless and legally unsustainable, were being used to delay one of the largest commercial transactions in the State and to sell Cablelink at a significant undervalue.

In another affidavit, Mr John Gregg of NTL, said he had been told by Mr Paine over the weekend of April 24th/25th that the vendors were minded to accept NTL's bid of £471.5 million although he understood no decision was taken at that point. He was unhappy when told on April 26th by Mr Paine that it had been decided to do another round of bidding. Mr Gregg also rejected claims that NTL was guilty of any wrongdoing and said damages could not compensate NTL for delays in acquiring Cablelink.

The question of public importance raised in this case was whether "Ireland Inc" in disposing of assets was to be permitted to proceed in the manner complained of by three out of five parties, said Mr Shipsey in closing submissions.

The hearing continues today before the president of the High Court, Mr Justice Morris.