C&W stuck with £300m loss-maker

HOPES that telecoms group Cable & Wireless will get out of its lossmaking US arm through a management buyout have been dashed.

A possible deal has been scuppered because bankers are not prepared to back it. The company is now looking for a trade buyer, though one venture capital firm may still be interested, according to sources close to the deal.

C&W's American business has been draining £300m a year after former chief executive Graham Wallace splashed out billionns on overvalued dotcom assets in the late Nineties.

New chairman Richard Lapthorne has made quitting the US a priority and has appointed private equity group Blackstone Capital in New York to find a buyer.

But City sources said this weekend that plans by the US chief executive Simon Cunningham to lead a buyout were foundering. 'Break-even is not expected for three years,' said a source. 'So any backer for Cunningham would want a big sweetener to take the business off C&W's hands - enough to wipe out its £1.5bn cash pile once write-offs are added in.'

C&W's broker Cazenove last week lowered its estimates for the cost of getting out of the US business by £200m to £800m. That helped push C&W shares up 4 1/2p to 118p. They peaked three years ago at 1562p.

A US exit would allow Lapthorne and recently appointed chief executive Francesco Caio to concentrate on problems in the core British business and resist new competition in the company's Caribbean businesses.