Murtagh threatened Smart liquidation, Fanning alleges

FORMER Smart Telecom chief executive Oisin Fanning has claimed at the High Court that businessman Brendan Murtagh threatened in October 2006 to put the company into liquidation unless all the directors not loyal to Mr Murtagh resigned and signed irrevocable proxies supporting his takeover of the company.

In autumn 2006, Mr Murtagh “manipulated and misrepresented” to shareholders the financial position of Smart, announced that a new investment vehicle with Mr Murtagh as shareholder would only invest if the shareholders agreed to him buying 90% of the company for €1 with the alternative being liquidation, Mr Fanning claims.

However, the “real motive” behind Smart Telecom founder Oisin Fanning’s legal challenge to the management buyout is to derail a proposed “highly sensitive” transaction between Smart Yuroe and another company, businessman Brendan Murtagh has claimed. As a 10% shareholder in Smart Yuroe, Smart Telecom would benefit from the proposed transaction.

This buyout was “a gross undervalue” as it did not take into account some €7.6m owed by Mr Murtagh to the company, or the €95m value of an option to purchase 90% of BBCL (Broadband Communications Ltd), from Mr Murtagh, he claims.

As a result the assets and undertaking of Smart Telecom was transferred to Smart Yuroe Broadband Ltd, leaving Smart as “a shell”, it is claimed. Mr Murtagh holds 50% of the shares in Smart Yuroe, with 40% held by other investors and the rest by Smart, Mr Fanning said.

Ms Justice Mary Irvine heard the claims in an affidavit by Mr Fanning read at the opening of his application for leave to bring an action aimed at overturning the management buyout of Smart on grounds of alleged unlawful and oppressive conduct of the affairs of the company by Mr Murtagh and others.

Mr Fanning wants to have the business purchase agreement of October 2006 between Brendan Murtagh and Smart, under which Mr Murtagh purchased the assets of the company for €1 plus 10% of the entire equity share capital of Smart Yuroe Broadband Ltd, declared null and void.

Brendan Murtagh, of Dunheeda, Kingscourt, Co Cavan, and his sons Alan and Fergal are defendants, and have asked the court to strike out the case as “opportunistic”.