Murtagh cash keeps Smart Telecom afloat

Troubled telecoms group, Smart, is relying on cash from its biggest shareholder, Brendan Murtagh of Kingspan, to keep the business afloat, it emerged yesterday.

Industry sources speculated last night that the company may be for sale. It has hired corporate financiers NCB to review its options for raising capital.

However, the board stressed that the group was looking at a range of possibilities. The review is scheduled to be completed by the end of the month.

Following the company's annual general meeting in Dublin yesterday, finance director Brian Timmons, said that "existing shareholders will provide the company's working capital from the present time" while it carries out a review of the business.

He did not say how much cash the company needs to continue trading. But, responding to shareholders' questions during the meeting, Mr Timmons said that its "burn rate" - the rate at which its operations use up cash - was running at between €2.5 million and €3 million a month.

Chief operations officer Ciarán Casey said shareholders had, in the past, provided the company with capital when it was in-between fundraising rounds. "There's nothing new in this," he stressed.

The directors did not say which shareholders were providing it with money. However, it is understood to be Mr Murtagh, who is Smart's biggest shareholder, with a 19.99 per cent stake. Mr Murtagh is a founder and director of listed building materials group, Kingspan.

In Smart's 2005 annual report, chairman Raymond King said it had a commitment from Mr Murtagh that he would continue to fund its short-term working capital needs.

The company yesterday confirmed that its chief executive, Oisín Fanning, is resigning on health grounds.

The board has appointed Mr Casey to lead the review. He said yesterday that this did not automatically mean he would be taking over as chief executive, but he indicated that he would be interested in the post.

Smart provides broadband and fixed-line voice services to household and business customers. According to its AGM statement, it has 16,5000 residential broadband subscribers and 160 corporate clients.

Last year its operations lost €21.7 million. It expects to break even midway through 2007.

In his statement, Mr Casey said that Smart was "facing into a challenging period, but we are confident that a refocused and re-invigorated Smart will succeed in the Irish telecommunications market".