The One.Tel team Brad Keeling, Lachlan Murdoch, James Packer and Jodee Rich. Photo: Jessica HromasThe final chapter of long-running legal action over failed telco company One.Tel has come to an end, with billionaires and one-time One.Tel directors James Packer and Lachlan Murdoch agreeing to a $40 million settlement with liquidators.
Thirteen years after One.Tel’s collapse, Mr Packer’s Crown Resorts and Consolidated Press Holdings will pay a combined $26.7 million and News will pay $13.3 million to special-purpose liquidator Stephen Parbery, of PPB.
Mr Packer and Mr Murdoch blew up $1 billion on the One.Tel investments made by their family vehicles PBL and News Corp.
It is believed discussions on this settlement started in February and the parties were never in the same room at the same time.
While the $40 million figure was foreshadowed by Fairfax Media last week, it is well below the $244 million originally sought by Mr Parbery.
The settlement means Mr Packer and Mr Murdoch will not have to attend court to explain their actions in the company’s collapse.
When One.Tel collapsed, Mr Packer and Mr Murdoch said they had been misled over the company’s financial health. One.Tel founder Jodee Rich, however, said the company had collapsed due to Mr Packer and Mr Murdoch withdrawing support for a capital raising.
The settlement was approved on Thursday by the NSW Supreme Court and means creditors are expected to receive just under 23¢ in the dollar. It will deliver creditors an extra 1.5¢ in the dollar, or $5 million, due to the bulk of the money going to a litigation funder.
NSW Supreme Court judge Justice Paul Brereton said that due to a number of factors – such as the risk further action would fail and ”the benefits to creditors of a prompt settlement and a certain, if small, dividend” – the liquidators would be ”justified in entering into and performing the deed of settlement”.
The settlement follows Mr Murdoch’s promotion to non-executive co-chairman of News Corp and its sister company, 21st Century Fox. Stephen Browning, a spokesman for News Corp, declined to comment. Mr Packer is overseas and his spokesman Mark Arbib did not comment further.
Telstra, which lost $49 million in the collapse, was contacted for comment, as was rival telco Optus, which lost $66 million.
Founded in 1995, One.Tel rode the late 1990s tech boom under the leadership of high-profile Sydney businessmen Jodee Rich and Rodney Adler to become Australia’s fourth-largest telecommunications company.
But despite a successful marketing campaign, built around cartoon mascot the ”Dude”, One.Tel could not build a viable business and collapsed owing $350 million in May 2001.
Mr Packer and Mr Murdoch have long argued they had been misled about One.Tel’s financial position.
In 2003, the NSW Supreme Court appointed Paul Weston as special purpose liquidator to investigate whether One.Tel’s collapse was brought on because Mr Packer and Mr Murdoch abandoned a plan to underwrite $132 million in additional funding. Mr Weston was later replaced by Mr Parbery.