Colt set to force through rescue

FRESH refinancing plans have been ruled out by Colt Telecom, despite a threat by some senior investors to vote against a £400m bail-out plan. Colt executives are now confident shareholders will back their money-raising proposals, which will end up handing control to major shareholder Fidelity group of America.

The company said it was unaware of any approaches by City financiers offering to put together alternative funding plans. Under Colt's emergency financing proposals, investors are being given the chance to buy new shares at 62p each compared with their market price of 190p.

In return for guaranteeing to buy all shares if other investors do not want them, Fidelity is being given the option to acquire 187m shares on top of the 309m to which it is entitled in the main offer.

At the current market price, that will hand a windfall profit of about £635m to Fidelity, whose stake in Colt, which builds fibre-optic networks for use by phone companies, will increase to a controlling position of at least 54%.

Shareholders will vote at an extraordinary meeting tomorrow on a waiver of the Takeover Code to allow Fidelity's holding to rise above 50% without the secretive Boston-based group having to make a full takeover bid for Colt. The investment arm of HBoS and the influential investment adviser Pirc are among those who are opposed to the deal.