THE HIGH Court has appointed accountant John McStay as interim examiner to telecoms group Smart Yuroe Broadband and related companies after being told that, while insolvent with liabilities of €101 million, the companies have a reasonable prospect of survival.
In court yesterday, Lyndon MacCann, senior counsel for the directors, said advanced negotiations are under way with two potential substantial investors that thought the capacity of the Smart companies could be used within their businesses.
The two interested parties were not named but are believed to be Dundalk-based Digiweb and Magnet Networks, an Irish subsidiary of US-based private equity company Columbia Ventures Corporation.
Smart now has up to 100 days in which to formulate a scheme of arrangement that would be acceptable to its creditors and the court.
Smart has 13,000 residential and 500 corporate customers. It also provides broadband and other services to 1,100 schools under a contract due to expire this month.
The petition by the companies’ directors, which was supported by its largest creditors, was moved yesterday just days after Citywest Ltd initiated proceedings for an order winding them up over a debt of some €80,521 due for rent, service charges, interest and insurance.
Counsel for the companies, which employ 57 people, said the alternative to examinership was liquidation and a firesale of the companies’ assets.
They would produce nothing for unsecured creditors and would not be a beneficial means of dealing with their assets, Mr MacCann said.
Appointing Mr McStay as interim examiner, Mr Justice Kevin Feeney listed the petition for examinership to be heard together with the winding up petition on September 9th next.
Court protection is being sought by Smart Yuroe Broadband Ltd (SYBL), Smart Telecom Holdings Ltd (STHL), which is the main trading company, and Broadband Communications Ltd, all with registered offices at Citywest Business Campus, Dublin 24.
SYBL acquired the assets and liabilities of Smart Telecom as part of a rescue deal in 2006. Its principal backer was Cavan-based Kingspan co-founder Brendan Murtagh.
In July 2007, it secured finance from certain US and Irish investment groups of €49.5 million to pay certain creditors and provide working capital for the group. With interest payments added in, this bill now stands at €70 million.
Management accounts for the three companies up to December 31st last showed combined losses of some €74 million. The court was told the companies are struggling to fund group working capital requirements.
Management accounts for STHL show it had losses of €20.69 million in 2008.
Mr MacCann said the companies’ business was inherently sound except for the overhanging debt relating to legacy issues and litigation.
In its petition, Smart said the SYBL group has a significant “next generation” network which is currently underutilised. It had also unbundled 37 Eircom exchanges and owns a significant part of the T-50 Dublin fibre trunk route.
