Telecoms group Go plc is following developments at Greek company Forthnet closely and will continue to protect its own and its shareholders’ interests following Tuesday’s announcement on the Malta Stock Exchange explaining why the Athens Stock Exchange had put Forthnet’s shares “under surveillance”, an official told The Times Business yesterday.
Go plc and its majority shareholder Emirates International Telecommunications (Malta) Ltd are joint shareholders in the Forgendo vehicle which holds 41.27 per cent of Forthnet’s share capital.
Go has directed €119.7 million to Forgendo in relation to Forthnet over the years but the carrying amount of Go’s exposure to Forgendo as at June 30 stood at €41.1 million.
Last Friday, Forthnet SA said its shares had been transferred to the “Under Surveillance Segment” by the Athens Stock Exchange following goodwill impairments totalling €56.9 million incurred in its financial statements between 2010 and the first six months of this year. The ensuing losses on Forthnet’s books are greater than 30 per cent of the total equity, breaching the parameters of the Athens Stock Exchange’s rules.
Earlier this week Go said it was currently unable to determine the extent, if any, to which events surrounding its investment in Greek firm Forthnet impacted the assessment of the value in use at the end of the year.
Asked whether Go intended to call a meeting for shareholders to explain both the current situation and the future of its holdings in Forthnet through Forgendo, Go told The Times Business: “Go has always acted in complete transparency with regards to its investments, including its involvement in Forthnet through Forgendo. The company announcement issued on Tuesday through the Malta Stock Exchange fully explains the recent developments impacting Forthnet.”
Go plc has around 8,000 shareholders.
“The company’s board of directors is also scheduled to convene in December and will discuss these events. The board will continue to strive to protect the interests of Go and its shareholders. At this stage, as there are so many external factors affecting Forthnet, there is not much that can be added to the details already given in the company announcement,” Go said.
After last Friday, trading in Forthnet shares will be carried out under the “call auction method” according to the stock exchange’s rules, for as long as its shares remain “under surveillance”. Forthnet is to call an extraordinary general meeting on December 15 to discuss a share capital increase of the company. It said it was hoping to raise at least €30 million.
The carrying amounts of Go’s investment in Forgendo and Forgendo’s investment in Forthnet are reviewed every six months through an assessment of value in use. The next review is due on December 31 as part of the financial year-end process.
Tuesday’s company announcement explained that based on these assessments over the past years, Forgendo recognised impairment losses on its investment in Forthnet amounting to €12.8 million in 2008, €11.8 million in 2010 and €17 million in the six months to last June.
Go said these assessments have been significantly impacted by the economic environment prevailing in Greece, particularly the impact on the company’s outlook and the weighted average cost of capital used in these valuations.
Go said that “at this moment in time” it was not in a position to determine the extent, if any, to which these events impact the assessment of the value in use at the year’s end.