BBCL owed Brendan Murtagh €6.5m in 2006

BROAD BAND Communications Ltd (BBCL), the telecoms network operator controlled by Brendan Murtagh and his family, had a €243,000 deficiency in assets at the end of 2006 and owed Mr Murtagh more than €6.5 million.

Accounts for BBCL, just filed with the Companies Office, show that the company’s profit and loss account improved by €601,253 during the year but it still had retained losses of €259,856. BBCL’s main asset is the T50 fibre optic telecommunications network which runs around Dublin, closely following the M50 orbital motorway.

BBCL was central to the recent challenge by former Smart Telecom chief executive Oisin Fanning to the October 2006 buyout of the telco by Smart Yuroe Broadband, a company controlled by Mr Murtagh.

This week the High Court refused leave to Mr Fanning to challenge the 2006 buyout. But Ms Justice Mary Irvine cleared the way for separate proceedings in which Mr Fanning claims the conduct of Mr Murtagh and his sons was oppressive towards him.

During that case, Mr Fanning said Smart’s option to purchase 90 per cent of BBCL was worth €95 million. When BBCL was folded into Smart in June 2007, the company placed a “conservative” value of €25 million on the asset.

In Ms Justice Irvine’s ruling, she said the “greatest deficiency” in Mr Fanning’s claim that the company [Smart] was sold at a gross undervalue was his failure to show any evidence as to the value to Smart of its option to purchase 90 per cent of BBCL.

Mr Fanning had baldly asserted the value of that option was €95 million but had produced no valuation evidence.

She said he had also ignored the fact that the option to purchase BBCL was dependent on Smart paying €10 million which, given the then value of BBCL of €7.5 million and the extent of Smart’s liabilities, was a significant sum in 2006.

Mr Murtagh, one of the two brothers behind building materials group Kingspan, and his sons Alan and Fergal between them hold 90 per cent of BBCL and so are considered the ultimate controlling party of the company.

The directors of the company are Alan Murtagh, Fergal Murtagh and Blathnaid Carolan.

Mr Murtagh was owed €6.59 million by BBCL at the end of September 2005 “in respect of a short-term shareholder loan”. During the year in question he was repaid €500,000.