In the High Court in London, Mr Justice Jacob dismissed the claims of Highberry as shaky, tentative and speculative peering into the middle distance, and concluded that there was no basis for forcing Colt in administration. Summing up, he said: There is not and never has been, any substance whatever in their petition. It should never have been launched.
Highberry Ltd, which is part of New York-based Elliott Associates, had attempted to show that Colt would become insolvent in the next few years, and would not have the funds necessary to repay or refinance around £1 billion ($1.5bn) in bonds due between 2005 and 2009. The claim was vigorously denied by Colt, which said it had cash reserves of £1 billion ($1.5bn).
Colt accused Highberry of buying £75 million ($118.5m) of its loan notes at a discount and seeking to make a speculative profit by forcing an unjustified transfer of value from shareholders to noteholders that a debt-for equity swap would bring.
If Highberry had been successful in persuading Mr Justice Jacob that Colt was heading for bankruptcy, it would have opened the way for a host of similar actions against highly indebted companies.
Source: Computerwire
