Bankers to collect £22m windfall from Cable & Wireless split

Bankers will collect £22m from Cable & Wireless's plan to split itself in two while shareholders will not receive a dividend boost.

NM Rothschild and Gleacher Shacklock, the joint sponsors and lead advisers of the demerger, will receive the bulk of payment.

Bankers at Barclays Capital, BNP Paribas, JP Morgan Cazenove, Lloyds TSB and Royal Bank of Scotland will also share in the fees. Lawyers and accountants at Allen & Overy, Linklaters and KPMG will also receive payments for their advice on C&W's plan to split its UK and Caribbean businesses into separately-listed companies.

However, shareholders were told the full-year dividend will not be increased above a planned 9.5p. The company said the combined 2010-2011 dividend will also be 9.5p, below analysts' consensus estimate of 9.9p.

Sir Richard Lapthorne, C&W's chairman, said: "Both businesses have clear and distinctive strategies and we believe demerger will create further value for shareholders."

However, Jonathan Groocock, analyst at Investec, said the split would be "earnings dilutive" and warned that cash cover on the dividend remains "very poor".

C&W has agreed to inject a further £30m into its pension scheme and raise $500m (£313m) through a bond issue in order to pave the way for the demerger.

Current shareholders will receive one share in Cable & Wireless Worldwide (CWW), the UK business, and one in Cable & Wireless Communications (CWC), which operates predominately in the Caribbean.

The company said it had not received bids for either business and was not seeking offers.

Sir Richard will become chairman of CWC. Tony Rice will retain his role as chief executive. John Pluthero will be chairman of CWW. Jim Marsh will continue as chief executive of CWW.

Shareholders will vote on the plans on February 25.

Source: The Telegraph, 3rd February 2010

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