Thus results offer refinancing cheer

Thus, the Glasgow-based telecoms company, said it needed less money than forecast to stay in business as it reported better than expected second-quarter results yesterday.

Rivals in the sector such as Colt Telecom have recently secured funding deals, sparking speculation that time was running out for Thus. But the company insisted yesterday it was well on the way to a deal.

Thus, which supplies telecoms services to business customers, said yesterday it was seeking ?80m-?100m.

Analysts had predicted the company could need as much as ?200m before being able to fully fund its own business plan, probably in 2004-5.

Thus, formerly Scottish Telecom, has been funded solely by its parent, ScottishPower, since it was founded in 1994. But finance director John Maguire said he would now like to bring in outside backers.

"Our own preference, as part of the growing independence of the business, is to bring in an element of third-party debt," he said.

Talks with several potential investors are understood to be advanced and ScottishPower, which holds 50.1% of Thus, is likely to be supportive of any deal that reduces its financial responsibility for Thus.

The energy group's debts have spiralled following its acquisition of US group PacifiCorp, and analysts think dividend payments could be hit.

Thus needs less funding because it has cut costs and revenues have come in more rapidly. Capital expenditure needs have also declined.

Yesterday Thus announced that it actually made a small underlying profit in the second quarter. On a profits excluding exceptionals basis it made ?600,000 in the three months to September, compared with expectations of a loss of several million pounds.

Analysts welcomed the results and Thus's pledge to have a funding scheme in place by next March, a sentiment reflected in its share price, which rose more than 7% yesterday.