administrators walk into new tel

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    Administrators walk into New Tel
    By Geoff Elliott
    December 11, 2002
    THE dream is over for New Tel CEO Peter Malone and Richard Steggal, would-be saviour of the Perth-based junior telco.

    One of New Tel's biggest creditors, Optus, owed more than $10 million, yesterday appointed accountants Phil Carter and Greg Hall of PWC as joint administrators of the struggling company.

    The administrators walked into New Tel's Sydney offices yesterday evening, bringing to a close an extraordinary month in which Mr Malone did all he could to stave off the appointment of independent managers to a company that is already under investigation by the Australian Securities and Investments Commission for insolvent trading.

    Mr Malone and Mr Steggall had been brothers in arms in trying to save the company. Late yesterday they walked into Optus's offices all guns blazing.

    They were in and out in under 10 minutes, shown the door by Optus business manager Rohan Lund, who did not believe Mr Steggall's claims that his Broadcast & Wireless Ltd group was independently funded.

    Both Mr Steggall and Mr Malone had been confident before the meeting. Mr Steggall said he was going to negotiate "bloody hard" while Mr Malone had told employees everything would be fine.

    "We have got the funding in place," Mr Steggall said as he walked to the Optus building. "Malone is here to clarify his position. We are going to go in bloody hard, our documentation proves we have independent funding. But if Optus want to screw, they will screw us."

    After they had walked out, Mr Steggall telephoned The Australian: "The meeting is over, I guess you know the outcome."

    Mr Steggall, 26, who is serving a three-year suspended sentence for fraud and who has used two different names in company filings, was the frontman for the mysterious BWL.

    The Australian had revealed its close connections with New Tel, with sources revealing that New Tel itself appeared to be funding BWL's efforts to restructure New Tel's debts, a money go-round that left Optus exposed. Any deal almost certainly would have been unwound at a later date since it would be regarded as a preferential payment to a creditor.

    Mr Steggall denied New Tel was funding BWL but has had few answers to questions that arose out of BWL's sudden appearance on the radar screen with claims to more than $70 million in funding.

    BWL had proposed buying Telstra's and Optus's debts – they were owed about $22 million – for about 50c in the dollar.

    New Tel admitted in a statement last week it was to pay BWL cash, as well as shares, if it could pull off the transaction.

    Yesterday, a Telstra spokeswoman backed the Optus decision to appoint an independent administrator to New Tel. She said it had been Telstra's preferred option.

    The appointment of the administrator means New Tel may continue to trade but serious doubts about its ability even to pay its salaries could still see the business wound up.

    The Australian has learnt that ASIC has interviewed Mr Malone and other executives over suspicions the company may have traded while insolvent from mid-October.

    Just three years ago, Mr Malone was riding high, having raised more than $100 million from shareholders on the back of a claim that New Tel would become the America Online of China, a reference to the biggest media and internet company in the US.

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