Versatel, the Dutch telecoms firm in which Mr Denis O'Brien holds a small stake, moved closer towards completing a debt-swap deal yesterday after a Dutch judge gave preliminary backing for a plan that is backed by creditors.
The firm, which has filed for bankruptcy protection in Dutch and US courts, aims to push ahead with the plan, which will erase €1.7 billion in debt from its balance sheet and give the bondholders 80 per cent of the firm.
A Versatel spokeswoman said the supervising judge in a Dutch court announced he planned to propose to the court that it approve the plan, and an official decision was due on September 18th.
A court in the US, where Versatel filed for Chapter 11 bankruptcy protection, backed the reorganisation plan last week.
The Dutch judge's decision came after virtually all Versatel creditors who have tendered their bonds voted to back the plan that will give them €347 million in cash and 80 per cent of the firm.
Current shareholders, including Mr O'Brien, who owns less than 5 per cent of Versatel, will own the remaining 20 per cent. Versatel's Dutch trustee has received claims from bondholders amounting to 85 per cent of total outstanding debt.
Under Dutch law at least two-thirds of claiming creditors have to approve the proposal.
Versatel ran into debt trouble after it spent heavily to build its network to capitalise on the predicted rapid growth in revenues from internet and data services, which failed to materialise. The company is now spending most of its cash to gain customers.
By filing for bankruptcy protection in June, well before it ran out of money, the Dutch company hoped to avoid the fate of local peer KPNQwest, whose assets are in the process of liquidation.
Trade in Versatel shares and bonds was suspended for a short period yesterday. Two years ago the company had a market capitalisation of €7 billion but is now valued at €31 million.
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