Vanco, worth almost £400m at peak, to be sold for £1 as cash runs out

The troubled telecoms carrier Vanco, worth almost £400m at its peak, is expected to be sold within the next two weeks for as little as £1.

Andrew Coppel, the restructuring expert parachuted in to rescue the company, has warned buyers he needs to strike a deal in days because Vanco is almost out of cash. BT is one of several firms thought to be considering an offer.

Shares in the virtual network operator, which rented band-width from rivals but owned little of its own infrastructure, were suspended 12 days ago and chief executive Allen Timpany resigned.

The most likely route is that it will be tipped into administration and then sold. Shareholders, including JO Hambro and Fidelity, will get nothing.

Lenders, led by Lloyds TSB, are negotiating to claw back some of Vanco's £123m debt. Companies that leased it equipment are also in the queue.

"We are working extremely hard to stabilise the financial position of the company and we have been successful so far," Coppel said. "We are looking to maximise value for stakeholders during the course of the days ahead."

There is not thought to be a black hole in the accounts, although some bidders doubt how reliable they are. Analysts think Vanco burnt through up to £60m in five weeks. Timpany was focused on growth at all costs and the company had been forced to defend its aggressive policy for recognising revenue. There is, however, no evidence of fraud.

Vanco's plight highlights the dangers of cosy relationships between companies and their auditors. Simon Hargreaves, the finance director who stepped down last September, joined Vanco in 1994 from Deloitte where he was audit manager on the company's accounts. Deloitte remained auditor until February this year, at which point it was replaced by Price Waterhouse Coopers.

The media regulator Ofcom is advertising for an investment bank to market internationally the sale of the radio spectrum that has carried Britain's analogue television signal for decades.

It wants to recruit an adviser to mount a marketing programme in the second half of 2008 ahead of an auction in mid2009.

Ofcom hopes to drum up bids from telecoms firms, infrastructure players such as Macquarie and sovereign-wealth funds.

The auction will raise billions, although far less than the £22.5 billion that was brought in by the 20-year 3G mobile-phone licences sold off in 2000.

Ofcom has been tidying up the use of radio spectrum and selling off spare capacity. The American chipmaker Qualcomm last week paid £8.3m for a slice of spectrum capable of transmitting live TV to mobile phones.

Britain's analogue television signal is being switched off region by region until 2012, when television will become digital-only. The spectrum could be used for new wireless broadband and television services.

source: timesonline.co.uk 18-05-2008