A High Court judge will announce Friday whether pan-European carrier Colt Telecom Plc should be put into administration because it will be unable to meet its debts after 2005.
After three days of hearings, the odds are stacked against hedge fund Highberry Ltd winning its battle. Both sides have wheeled out high-powered accountants to argue the case, but Justice Jacob showed little reverence for the bean counters’ arguments. They are no different from experts who advise you on the results of next Saturday’s football matches, he said.
Highberry is arguing that Colt is facing inevitable insolvency and that its assets are almost worthless, while Colt insists that it has ample funds to carry it through to profitability. Justice Jacob has declined to be impressed with the arguments. At one point he said: All of these numbers are complete speculation. I may come to the conclusion I have no idea who is right.
Highberry Ltd, which is part of the New York-based The Elliot Group, bought Colt bonds cheaply, and Colt alleges that its motive is to gain a substantial equity stake in the company if it is pushed into administration and an inevitable debt-for-equity swap follows.
On the last day of a three-day hearing this week, both sides answered questions on their final written submissions and will return to the court Friday for Justice Jacob to issue his written judgement on the case.
While Highberry may have a slim change at the moment, the fear in the Colt camp is that this is the first shot in a long-running battle and it could mount another legal challenge if Colt’s figures show any weakness in future.