One.Tel's mobile phone, fixed line and Internet businesses will be systematically wound up over the next seven to 14 days after administrators announced yesterday there was no feasible way to keep the company afloat.
One.Tel's 3000 creditors are owed in excess of $600 million with the list headed up by the likes of Telstra, Optus, Lucent and Compaq and encompassing a myriad of smaller IT contractors, service providers, suppliers and retail outlets. Steve Sherman of administrators Ferrier Hodgson said it is too early to speculate on the dollar returns to creditors.
However, he said the pecking order will see employees, then creditors and lastly shareholders paid out, if indeed there is anything to pay out at all. At this stage there is no guarantee of any return whatsoever.
An arrangement has already been stitched up with Optus and Telstra to provide continuity of service for One.Tel's near-700,000 thousand local mobile customers. The two large telcos will in essence buy One.Tel's customers for an undisclosed value. Ironically, customers who choose to go to a service provider other than these two parties will be hit with an unspecified fee for breaking their One.Tel contract.
Further discussions are being held regarding One.Tel's fixed line and Internet subscribers but Sherman would not disclose the identity of interested parties, saying only that they were not necessarily Telstra and Optus.
Lucent's debt, accrued through the construction and funding of One.Tel's Next Generation GSM network, has been downscaled from original figures of $600 million to $50 million for the Adelaide and Perth segments of the network only.
Out of the five capital cities involved in the rollout, these are the only two which One.Tel already has customers on. This means that Lucent exclusively owns the Melbourne, Brisbane and Sydney networks, a deviation from its original contract and an outcome the vendor may not be thrilled about considering the low dollar-value of networks in the current climate. Lucent is also entitled to the Adelaide and Perth networks.
One.Tel co-founder and former director, Brad Keeling has offered $3.5million to underwrite any shortfall in relation to employees annual leave and other entitlements once all other avenues have been exhausted.
One.Tel's 1700 workers, who will be let go as early as Friday this week, are owed $19 million, a sum Sherman says he currently doesn't have but one that is expected to be covered after a firesale of the telco's assets. One.Tel's primary asset is Spectrum for which it paid $500 million last year but which has since depreciated in value significantly.
Keeling's fellow founder and ex-company director, Jodee Rich has also offered Ferrier Hodgson a proposal worth a potential $4.2 million based on the sale of his Craigmoor mansion in Sydney and a further $2.1 million currently being held by the Australian Tax Department.
"Neither of them have come up and dumped signed cheques on my desk," said Sherman, adding that acceptance of Rich's proposal, issued at 9pm on Monday evening, would be up to One.Tel creditors.
Despite the offer, Sherman reiterated that One.Tel would be wound up. With the company accruing $12 million in operational expenses a week, he said the only thing which could possibly save telco at this stage is a large cash injection.
Sherman side-stepped repeated attempts to draw out whether or not One.Tel had been trading while insolvent. However, he did say that all directors, including Lachlan Murdoch and Kerry Packer, will be liable in the event that the company is found to have been trading insolvently.
Ferrier Hodgson is also reserving its right to seek legal action against Optus for demanding One.Tel settle its line rental debts at such an inopportune time, a move which Sherman says effectively forced its winding-up.