The main virtue of Lapthorne, who chairs the boards of five other companies, is that he has no previous connection with C&W. His role will be to try to find a way to extricate the company from its current plight that has brought about a collapse in its share price after it reported a $7.3bn first-half loss.
Investors have not forgiven Wallace after he burned a 6bn pound ($9.6bn) cash pile acquiring web-hosting companies at a time when the whole industry was investing in an over-capacity of such assets. They proved a superb way of burning money as everyone slashed prices to keep customers.
The final straw was the revelation that 1.5bn pounds ($2.4bn) of its remaining 2.4bn pounds ($3.8bn) cash is ring-fenced to cover any tax liability that Deutsche Telecom AG may face after the German incumbent’s 1999 acquisition of its 50% stake in wireless operator One2One from C&W. This week C&W said that this money had been placed in an escrow account where it must wait for a number of years for a decision from UK tax collectors.
Oblivious to the odium in which the investment community held it, C&W planned to replace retiring chairman Ralph Robins with existing director David Nash. But a meeting between directors and shareholders representing a significant proportion of the company’s equity in November convinced Nash that someone who had backed Wallace’s strategy did not command the confidence of investors and he quit the board.
Source: Computerwire
