cdr in the syd morning herald

http://business.smh.com.au/no-saviour-for-telco/20071130-1e0z.html


No saviour for telco
Email Print Normal font Large font AdvertisementAdvertisementMatt O'Sullivan
December 1, 2007

COMMANDER Communications has failed to attract a white knight despite desperate attempts for more than a month, leaving the company considering an equity raising to help pay off debts that have ballooned to $365 million.

Commander's management was accused by hostile shareholders at its annual meeting in Sydney yesterday of "fiddling while Rome burns" because it had remained silent over most of the last two months as the share price hit recurrent all-time lows.

More than $406 million - 88 per cent - has been wiped from Commander's market value over the past six months as institutional shareholders rushed for the exits in the wake of three swift profit downgrades and a trading suspension for failing to lodge its accounts.

Yesterday shareholders who had flown from as far afield as Perth vented their anger on the board and management. Apologies from Commander's chairwoman, Elizabeth Nosworthy, could not disguise the fact none of the directors or senior managers had fallen on their swords despite the company's plight.

Two directors seeking re-election - Neil McDermott and Terry Winters - bore the brunt of the shareholder backlash. Mr McDermott narrowly escaped losing his seat after about 45 per cent of shareholders - including major investor Hunter Hall - voted against him.

Ms Nosworthy did concede that senior management, including the chief executive, Adrian Coote, had to take responsibility for errors in the business strategy, but said she would not accept their resignations in the short term because it could damage Commander's customer relationships.

"We have to dispel the view in the market that the company is about to fold up and go away," she said. "We are not about to fold up and go away."

Responding to claims Commander had "technically become insolvent", she said the likelihood of it finding itself in breach of its debt covenants was "very low".

Ms Nosworthy, who is deputy chairwoman of Babcock & Brown and a former Telstra director, said Commander's first priority was to repay its high levels of debt, perhaps partly via an equity raising. She also conceded senior managers had been poached in recent months while others "took fright" at the woes and resigned.

Commander opened its data room to fewer than 10 parties - believed to include AAPT-PowerTel, SP Telemedia and Optus - early last month in the hope of receiving a full takeover or cornerstone investor, but Ms Nosworthy said none of the offers had been in shareholders' interests.

Some parties had sought to buy parts of the company, she said, but any such sale might damage the overall business. Others had just wanted "to have a look".

Ms Nosworthy also accused competitors of exaggerating Commander's predicament to undermine customer confidence.

Shares in Commander rose 7.5c to 32c yesterday.