Rich, Keeling Bail out of OneTel

Rich, Keeling Bail out of OneTel

One.Tel directors, Jodee Rich and Brad Keeling have resigned from their positions, while Packer and Murdoch interests have moved in quickly with a new funding package for the struggling company.

The gap in the One.Tel board will be quickly filled by PBL's Peter Yates and News Limited's Peter Macourt, while Keeling will stay on as an advisor to the board until the end of June.

In its statements to the market, One.Tel did not give a reason for the departure of Rich and Keeling, with both parties contributing positive parting statements to the official line.

"The simultaneous decisions of our major shareholders to take a more active role in the business heralds a positive era for One.Tel," said Rich.

Keeling added,"Jodee and I thank the team for their efforts in building the company and wish them all the best while the next chapter for One.Tel is written."

News Limited and PBL will be the key authors of One.Tel's next chapter, with the two companies announcing that they will be underwriting an $132 million renouncable rights issue, in an effort to provide the company with working capital to "fund its immediate business plans."

Meanwhile, One.Tel itself issued a statement saying that a capital raising exercise was required because the company's cash position is now expected to be lower than forecast. It blamed European carrier issues, billing and resultant collections issues and provisioning delays as factors behind the deteriorating cash flow situation.

Shareholders will be offered one fully paid new share for every existing share held, at an issue price of five cents per share - a figure well below the current share price, which was at a low of 23 cents today.

In a joint statement by Yates and CEO of News, John Hartigan, both companies reaffirmed their commitment to the One.Tel venture.

"We believe that One.Tel is at an important stage in its development. Further funds are needed to continue to implement One.Tel's operational program and key initiatives," they said.

With PBL and News Limited taking up the new shares that are not accepted, it will take the companies' combined spend beyond the $908 million already invested.

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