Another one bites the dust

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    New Tel follows down trail of debt
    Geoff Elliott and Michael Sainsbury
    NOVEMBER 08, 2002
    PERTH-based telecommunications company New Tel stopped paying many of its bills in June to prop up its financial position and avoid a cash crisis.

    According to documents obtained by The Australian, New Tel slashed payments to suppliers, who include Telstra, Optus and AAPT, from $17.2 million in May to just $581,457 in June.

    Several senior New Tel executives spoke to The Australian yesterday on the condition of anonymity, saying they feared the imminent collapse of the company, which raised more than $200 million at the height of the dotcom boom.

    New Tel's crisis deepened this week as a deal to nearly double the company's revenues to $250 million fell through after it failed to raise $50 million in finance.

    Questions are now being asked of New Tel chief executive Peter Malone, who was instrumental in New Tel's massive capital raisings with remarkable claims about the company's future.

    Mr Malone was in Sydney last night in a desperate attempt to save his company but would not return calls.

    The Australian has obtained New Tel cash-flow statements, prepared by former chief financial officer Steve Parks – he resigned suddenly last month – which indicate that in July and August revenues were sliding dramatically. At August 31, it had just $408,582 in cash, compared with $4.38 million at end June – a number allegedly boosted by the stalled payments to suppliers – and indicates the company could now be insolvent.

    Sources said creditors were now owed up to $30 million and its largest creditor, Telstra, wrote to New Tel last week to terminate its wholesale provision of services.

    New Tel executives say Telstra is owed $12 million, Optus $6 million, AAPT about $1.5 million and Siemens about $1 million.
 
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