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Tuesday, 5 June, 2001, 20:22 GMT 21:22 UK
One.Tel to be wound down
Joint administrator of One.Tel Steve Sherman
Mr Sherman: 'too early to speculate on buyers'
The assets of failed Australian telecom company One.Tel are to be sold off by the administrator and its business wound down.

The company was placed into administration last Wednesday after its major shareholders, Kerry Packer's Publishing & Broadcasting Ltd (PBL) and Rupert Murdoch's News Corp, declared it insolvent.

In a further humiliation for its high-profile backers, One.Tel's offices were reportedly raided by Australia's corporate watchdog, investigating possible breaches of company law.

Media heirs James Packer and Lachlan Young, who persuaded their fathers to pour around A$900 million into One.Tel, have also been questioned by the Australian Securities and Investments Commission.

They claim they were misled over One.Tel's true cash position prior to its collapse.

One.Tel's founders Jodee Rich and Bradley Keeling have offered to hand back a large chunk of the hefty bonuses received as the company racked up huge losses, following press and public pressure.

Huge debts

But it is unlikely the extra cash will keep the company afloat.

On Tuesday, Joint administrator Steve Sherman, a partner at Ferrier Hodgson said: "During the next seven to 21 days we will do a systematic wind-down of the operations."

He estimated One.Tel's gross debt stood around A$600 million (US$306 million) and could rise.

Mr Sherman said Australia's two biggest telecom companies, Telstra Corp Ltd and Cable & Wireless Optus Ltd together were owed about 1A$100m.

US-based Lucent Technologies, which is building a mobile network for One.Tel, was owed about A$50 million and was expected to shortly become a secured creditor.

He said it was too early to speculate how many cents in the dollar creditors were likely to receive, or the identity of potential buyers.

Media heirs

Mr Sherman said that finding A$19 million owed in entitlements to One.Tel's 1,400 employees hinged on the administrator's success in selling the assets of the beleaguered group.

Brief talks have been held with James Packer and Lachlan Murdoch but the pair have not offered to cough up cash to help meet worker entitlements, Mr Sherman said.

The joint investment by the Packer and Murdoch families in One.Tel was seen as an important deal in Australia, where it signified the mending of fences between the two media empires.

Relations had become soured following a damaging row over the rights to rugby league in Australia.

Paying back

Australian Treasurer Peter Costello waded into the saga on Tuesday, calling on One.Tel's shareholders to chip in.

"I believe some of the other shareholders who have deep pockets should make sure there is adequate provision for the employees," Mr Costello told Australian Broadcasting Corp radio.

Founders Mr Rich and Mr Keeling, who both received A$7 million bonuses last year despite One.Tel notching up a A$291 million loss, now say they plan to pay some of it back.

Serious implications

One.Tel provides mobile, fixed-line, broadband and internet services to 1.8 million customers in Australia, Hong Kong, the UK, France, Switzerland, Germany and The Netherlands.

Expressions of interest will be sought for the overseas units, which have 1.6 million customers.

The administrator will make an announcement over the next seven to 14 days on whether One.Tel was trading while insolvent, a corporations law breach which could have serious implications for both James Packer and Lachlan Murdoch as directors.

News Corp owns 23% of One.Tel, while the Packers have 11% through ConsPress and 17% through PBL.

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See also:

30 May 01 | Business
One.Tel collapse angers magnates
02 Jun 01 | Business
Watchdog 'swoops' on One.Tel HQ
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