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Essar acquires bankrupt US telecom company

NetScribes/R Radhakrishnan

The Essar group has acquired a bankrupt US telecom company Telequestion Inc.

The deal has been done through e-TeleQuest Incorporation, a new company floated by the Essar group in the US for this specific purpose. Telequestion has been operating under Chapter 11 since June 2000 and is a national provider of in-bound and e-commerce customer contact services.

Analysts, however, expressed surprise over the deal as the Essar group has gone ahead with the acquisition despite caution and warnings from financial institutions.

The deal marks the Essar group's first investment in the US and is despite warnings from financial institutions in the country that the group should refrain from any further expansions or new projects till its steel, oil & gas and telecom businesses stabilise. It may be recalled that Essar Steel, a group company, had scored a sort of firsts by defaulting on its $250-million floating rate note issue in July last, the first-ever default by an Indian corporate in the international markets. These notes have subsequently been rescheduled with the consent of FRN-holders and financial institutions.

Essar officials in Bombay confirmed the deal. "Telequestion is into the business of incoming and outgoing calls of e-commerce activities. It has perfect synergy with our telecom business in India and it can add more value for the cellular business. We have acquired the assets of the company and not the liabilities," said an official.

Essar Telecom, a closely held telecom and cellular company of the Ruias, operates in Delhi, Rajasthan, Punjab and Haryana.

Though the deal size was quoted to be around $2.5 million, company officials refused to confirm the total deal size.

Interestingly, Telequestion came into the limelight during the US presidential elections when it bagged a project to contact select voters at Palm Beach in Florida, which has become the center of the world's attention over the past few days.

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