Thus sells Dutch ISP to settle debts

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Thus, the second-tier UK business telecoms company, has agreed to sell its Dutch internet business, Demon Netherlands, to settle debts and focus on its UK operations.

Thus shares soared almost 7 per cent on the news shortly after trading opened.

Demon Netherlands will be sold to Dutch incumbent telecoms company KPN for €69m ($88.3m), and Thus will use the proceeds to reduce its debt, which was £52m ($97.1m) at September 30. Thus has a £15m revolving credit facility until 2010 and a £40m amortising loan, for which repayments begin in December.

Analysts covering Thus welcomed the price it had gained for the sale. “Excellent price,” wrote Investec. “Good news for Thus,” wrote Dan Gardiner at Bridgewell Securities, who had expected net proceeds of around £20m rather than the £30m to £35m it is now expected to gain. Citigroup said it “certainly reduces the risk premium” for Thus.

Demon Netherlands made revenues of €28.9m for the year to March 31, and earnings before interest, tax, depreciation and amortisation of £2.2m. Thus said the subsidiary’s gross assets were £5.3m and the business had about 70,000 customers.

Thus said the sale would be subject to approval from the works councils of both KPN and Demon Netherlands.

Thus shares were 6.8 per cent higher at 141p in early morning trade but returned to Thursday’s closing price of 132p by late afternoon.

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