Energis declines to pay out as new deal looms

Struggling telecom business Energis yesterday said it will not pay its bondholders a £13.7m interest payment which falls due today, leaving the company technically in default.

Energis, forced into a full-scale financial restructuring by a dramatic profits warning earlier this year, now has 30 days to pay up under the terms of the bond agreement.

The news came as Energis drew up a shortlist of prospective bidders for the company, understood to include private equity groups, Colt Telecom and an investment vehicle run by former Sports Internet Group boss Peter Wilkinson.

Energis is understood to have held back the coupon payment because it is confident that a framework for a debt-for-equity swap can be concluded with bondholders within 30 days.

Bondholders with roughly half of Energis's £550m worth of bonds have already approached the company offering to inject cash if no other rescue plan emerges.

Energis is also talking with its banks about renegotiating its £725m overdraft.

News of the bond default pushed Energis shares lower to close at 2.77p, valuing the business at just £50m.

However one bondholder said last night: "I am not surprised that they did not pay up - we are hoping to have some sort of deal organised very soon."