Cable & Wireless Plc has been forced to clarify its outstanding lease commitments in the face of suspicions that big cut-backs in its international operations would leave it with huge liabilities on leases of property that it will vacate.
C&W insisted that the 700m pound ($1.1bn) lease commitments that follow the restructuring were included in the 800m pound ($1.26bn) costs of the operation revealed at the time. It said that after the restructuring, it will have outstanding lease commitments of 1.4bn pounds ($2.2bn) for its ongoing operations.
Concern over lease liabilities is part of a total collapse in confidence by the financial community in C&W, and in particular its chief executive Graham Wallace. Reports suggest that investors refuse to have any contact with Wallace and deal with the financial director instead.
They feel that having burned billions of dollars building the company’s global unit into a major web hosting operation that has been a financial disaster, it should have been pruned back savagely to avoid further losses. C&W’s decision to cut back the operation last week, with the loss of 3,500 jobs, is regarded as a feeble compromise.
The only consolation for disgruntled investors is that they can now take bets on how soon Wallace loses his job. Spread betting company Financial Spreads puts his remaining time with the company as 35 to 40 days, suggesting he is in for a miserable Christmas.
There is also speculation that leading investors have approached Peter Manning as his replacement. Manning is a former CEO of Colt Telecom Group Plc, prior to which he was president and CEO of Concert Communications Inc. Neither of these companies was a glittering financial success but this has become a business where few have made money for many years.