O'Brien and Kilkenny settle Digicel action

Two prominent businessmen - Mr Osmond ("Ossie") Kilkenny and Mr Denis O'Brien - have settled a a High Court action over the ownership of shares in a multimillion euro company which was set up to develop mobile phone operations in the Caribbean.

The proceedings had been brought by Mr Kilkenny against Mr O'Brien, the founder of Esat Digifone. The case opened yesterday for a short time before Ms Justice Finlay Geoghegan but was then adjourned to allow time for the sides to see if they could "narrow some of the issues".

It is understood that matter was later settled, although the terms of the settlement were not disclosed. The case will be mentioned again on April 5th.

In the action, Mr Kilkenny sought a declaration that he is beneficial owner of 13.5 per cent of the issued share capital of Digicel Ltd, with its registered office in Kingston, Jamaica. He also wanted an injunction restraining Mr O'Brien taking any steps to dilute the plaintiff's shareholding in Digicel. He was also seeking damages for alleged breach of contract.

Mr O'Brien opposed the claim and had brought a counterclaim. Mr O'Brien admitted Mr Kilkenny and Mr O'Brien had at all material times been beneficial owners of shares in Digicel. It was also admitted that they, and subsequently Mr Leslie Buckley, agreed to invest in a company, which became Digicel, with the intention of acquiring a mobile phone licence in Trinidad and Tobago and the subsequent development of that business.

However, Mr O'Brien denied other parts of Mr Kilkenny's claim and had counterclaimed for an order for specific performance of terms of settlement of Mr Kilkenny's proceedings, as set out in a letter dated October 23rd, 2001. He was also seeking damages in lieu of or in addition to, specific performance.

Earlier yesterday, when opening the case, Mr Donal O'Donnell SC, for Mr Kilkenny, said Digicel was incorporated in October 2000 and was a holding company of a group of companies which hold interests in telecommunications in the Caribbean. A relatively simple deal was done between them.

It was Mr Kilkenny's claim that he entered into a joint venture with Mr O'Brien to pursue telecommunications interests in the Caribbean. They had been co-operating for two-and-half-years before the arrangement broke down.

Mr O'Donnell said his client was born in 1947 and by training was an accountant but had started life as a musician. At one stage, he was approached by Bob Geldof of the Boomtown Rats who asked that he act as their accountant. Mr Kilkenny went on to successfully represent others in sport and entertainment.

Counsel referred to Mr O'Brien's "extraordinary success story" in Irish business and referred to his telecommunications interests here.

At the end of 1998/beginning of 1999, Mr Kilkenny was in the US, meeting a businessman who had interests in the Caribbean. He learned that a company named Clico was interested in bidding for a second mobile phone licence in Trinidad and wanted to find a suitable partner. Mr Kilkenny thought of Mr O'Brien and Esat as a "perfect fit". In early 1999, Mr Kilkenny contacted Mr O'Brien and suggested that he/Esat might be interested in the venture. They engaged in a joint venture with Clico. The Irish interest was to be 49 per cent.

Mr Kilkenny and Mr O'Brien agreed on the arrangements. Mr O'Donnell said Mr O'Brien had said he thought the arrangement could be done in terms of capital investment for about $30 million (€22.7 million). Mr Kilkenny said he would invest up to $6 million and it was agreed that would entitle him to 20 per cent of the business.

It was common case at that time that, with capital of the amount referred to, it would be relatively easy to finance the project and that the rest of the finance would be through debt.

There was no doubt that there was an agreement for Mr Kilkenny to have 20 per cent of the business and Mr O'Brien to have 80 per cent.

A joint venture was set up and its bid for the licence in Trinidad was successful. Later Mr Kilkenny and Mr O'Brien were involved in a joint venture which was a successful bidder for a licence in Jamaica.

Mr O'Donnell had not completed his opening when Mr Dermot Gleeson SC, for Mr O'Brien, asked the judge for time. This led to an adjournment. Later The Irish Times learned the case had been settled.