Telent shareholders taste frustration

A hedge fund that speaks for 24 per cent of Telent has blocked the planned £346m sale of the company to US private equity fund Fortress, despite the other 75 per cent of the shareholders being in favour.

Telent is the remains of once-mighty British engineering empire Marconi, left over after Ericsson’s acquisition of the core Marconi businesses. It consists of the legacy UK fixed-line business and the support services arm, but more importantly is the steward of the vast pension fund that provides for the retirement of an army of former Marconi workers.

When the company was broken up, Ericsson paid some £490m in cash into an escrow account at the fund to guarantee the future solvency of the scheme. It is now feared that Polygon, the fund that holds 24 per cent of the firm, is hoping to get its hands on this money.

Under the Companies Act and the Telent memorandum of association, a three-quarters majority would be needed to push the sale through against opposition. This means that the sale to Fortress will fall unless literally all the other shareholders vote their stock with the management.

Telent chief executive Mike Parton said that the Polygon scheme was unlikely to succeed. “We don’t think that any money will be released from that account for a very long time, if ever. That is a view supported by Fortress. They have put in place a second escrow account to get the regulatory approval for the bid,” he said.