Smart’s €1 buyout included €50m liabilities, court hears

FORMER Smart Telecom boss Oisin Fanning is not a credible person to challenge the October 2006 buyout of the company by businessman Brendan Murtagh, the High Court was told yesterday, as Mr Fanning himself both voted for and benefited from the deal.

Submissions for Brendan Murtagh and his sons, Alan and Fergal, oppose Mr Fanning’s application for leave to bring proceedings to overturn the buyout.

The court was also told Smart has claimed that, instead of owing Mr Fanning money, he owes it some €860,000 in alleged overpayments and items allegedly improperly claimed by him as business expenses.

Mr Paul Sreenan SC said the buyout was not for €1, as alleged, but involved Mr Murtagh taking on Smart’s €50 million liabilities and giving it a 10% equity share of the newly formed company Smart Yuroe Broadband.

Mr Sreenan said Mr Fanning had, prior to the buyout, negotiated a severance package for himself and had left out of his petition challenging the buyout the “critical fact” that he himself had voted for it. Mr Murtagh’s offer in October 2006 was “the only show in town” given Smart’s precarious financial position, its inability to pay its debts and the lack of any other offers. Contrary to claims by Mr Fanning, Mr Murtagh also did not owe Smart any monies in October 2006, counsel added.

He said the deal was supported by the Smart Board of Directors and by more than 97% of shareholders at an emergency general meeting and it would be very difficult to unwind it now.

He said Mr Fanning’s delay in bringing his legal challenge was a factor to be taken into account. There was no reference to Mr Fanning bringing legal proceedings until some days after newspaper articles in April 2008 related to the possible sale of Smart Yuroe to O2. This was “opportunistic litigation” by Mr Fanning.

Yesterday was the second day of the hearing of the application by Mr Fanning for leave to bring an action to overturn the October 2006 buyout of Smart on grounds of alleged unlawful and oppressive conduct of the affairs of the company by Mr Murtagh and others.

The hearing continues.