Rumours of Clear deal far from clear

Friday 6th July 2001

PETER KALIAROPOULOS: Categorically ruled out possibility of a management equity position in April

By Rob Hosking

The long-running "who's going to buy Clear Communications" saga took another turn this week, with a fresh burst of rumours linking former shareholder Todd Corporation, Jump Capital and - a new one - US investor Berkshire Partners.

Other possible buyers mentioned in recent months include Telstra Saturn, and executives of the relevant firms now tend to preface their "no comment" responses with an audible sigh.

"This has become a fairly self-sustaining rumour," Jump Capital principal Leigh Davis said yesterday. "We're one of those companies mentioned from time to time as a possible buyer. But we're not going to say anything until we have something to say, if indeed we do have something to say. And right at the moment we don't."

However, Mr Davis said he did not think any change to Clear's ownership would come "for some months yet."

Last year a management buyout of Clear, by a group involving chief executive Peter Kaliaropoulos and Jump Capital, was under discussion but this came to nothing.

In April, Mr Kaliaropoulos categorically ruled this out, saying "management is not seeking to take an equity position."

The re-entry of Todd Corporation in the Clear ownership stakes is a new twist. Todd held 25% of Clear during most of the past decade but sold out to British Telecom in 1999 for an amount believed to be around $85 million. The Todd group, through subsidiary Todd Capital, is targeting telecommunications, media and technology investments, and holdings include a 14% stake in INL.

BT is understood to have wanted at least $600 million for Clear but buyers have baulked at paying this much.

Telecommunications market analysts put the value of Clear as being about $300-350 million, although rumours this week suggested it had been sold for a figure between $400-500 million.

That still means BT has not recouped its investment in New Zealand, which - since it first bought into Clear in early 1996 - is put at close to $1 billion.

BT last year declared its intention to withdraw from most of its markets in the Pacific region, and to concentrate on Europe and Japan. However, since then it has sold down its Japanese assets as well, in a bid to reduce its debt, valued in the vicinity of $NZ100 billion.

While that means its ownership of a small telecom-munications carrier in a country with a population size of a London suburb is not a priority for BT, the size of the debt compared with what it might get for Clear means there is no urgency either - so long as Clear is not losing BT money.

Last year Clear reported a loss of $30 million, but has promised it will be in the black for the next result.

Clear's financial year ended on 31 March, and the company, which usually reports in August, said it would show a small profit for that year.

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