Debts pile up bond misery at Energis

BANK loans to troubled business telecoms group Energis have ballooned £100m to around £700m, dimming the prospects of a return to holders of its £560m bonds.

If the new figure is taken into account, the bonds may now be worth at best £20m, returning holders as little as 3 2/3p in the pound. The City currently values them at 12 1/2p to 14p in the pound. At the same time, Energis decided not to pay bondholders £13.7m interest, due yesterday.

The company put itself up for sale after discovering it would breach promises to its lenders, made a few months earlier. Apart from poor financial control, it has suffered from a slump in demand.

Bear Stearns bond analyst Simon Surtees said that, if the new bank debt figure is correct, Energis would have to achieve a price above £800m for its UK operation for the bonds to be redeemed at their current market value. Energis adviser Goldman Sachs hopes to attract bids of about £1bn, but many regard this as optimistic.

Bidders, believed to include venture capitalists Apax Partners, Carlyle Group, Kohlberg Kravis & Roberts and Credit Suisse First Boston, will submit their latest offers at the end of this week.