Shares in Tiscali fell almost 48% yesterday after the Italian ISP revealed efforts to sell its UK business to British Sky Broadcasting (BSkyB) collapsed, the Financial Times reports.
The Milan Stock Exchange suspended trading it Tiscali's shares after BSkyB declined to pay £450 million (€491.9 million) for Tiscali's UK business.
The company blamed "the worsening of the market environment" for the breakdown of negotiations with BSkyB. BSkyB, the satellite TV operator, is 39.1 per cent owned by News Corp.
Tiscali said asking its banks, led by JPMorgan and Intesa Sanpaolo, for a suspension of payments relating to €500 million of long-term debt. Interest payments of €11 million are due on Wednesday and Friday, according to the FT.
Tiscali said in August it would generate €220 million-€230 million of earnings before interest, tax, depreciation and amortisation in 2008, but on Friday the company scaled that forecast down to €200 million the FT article said.
Tiscali has never reported a net profit and had net debt of €557 million at September 30. UBS analysts estimate Tiscali's debt burden to be markedly higher than similar telecoms companies.