Administrators go in at Powernet

By ROSS DAVIES
Updated:

 

Communications and internet company Powernet Telecom has become the latest dotcom casualty. It went into administration on Monday, leaving staff and a host of top name telecoms companies unpaid. The High Court in Manchester appointed Arthur Andersen partners Simon Allport and Richard Fleming to administer the group.

Powernet, which owns internet service provider TotalServe and internet incubator fund PowerTen as well as selling fixed-line services and mobile phones, said efforts to raise finance after it abandoned a £600m summer flotation, had failed.

A subsequent attempt at a £123m reverse takeover to get a listing for its internet operations was also scrapped, undermining company efforts to execute a £150m infrastructure growth plan creating 500 new jobs. 'Powernet has been unsuccessful in raising the finance it had been seeking to support its operations and the directors have had no option but to ask for the appointment of administrators,' said an Arthur Andersen spokesman.

The failure of the company is a second blow for chief executive Ian Carey, whose last venture, Callfree Directories, went into voluntary liquidation, resulting in a May 1999 court ruling banning him as a company director for five years, which he had overturned on appeal.

Carey holds a majority of the voting rights in Powernet and his senior management team, which includes 22-year-old operations director Richard Barlow and Scotland's Gordon clan chief Granville Charles Gordon, the Marquess of Huntley, are other major shareholders.

Arthur Andersen said it would take some time to establish the level of group debt, though Powernet's cash burn rate is known to be high. It spent £8m on a TV advertising campaign earlier this year.

The group's 85 employees have been locked out of its Manchester office since they were sent home on Friday after police were called in the wake of threats to remove computer equipment in lieu of unpaid salaries.

Marconi, which signed a £2.5m equipment deal with Powernet last year, declined to say whether it had been paid. Other major creditors are thought to include Cisco Systems, from which the firm bought £13m of equipment on generous financing terms, and there have been similar deals with Sun, Hewlett Packard, Oracle and Nortel Networks.

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