Telekom taken to court over share price fall

23rd November 2004, Comments 0 comments

23 November 2004 , FRANKFURT - A state court in Frankfurt on Tuesday began the massive task of dealing with thousands of lawsuits from over 14,000 shareholders in Deutsche Telekom angered by the loss in value of their stocks since the new economy share bubble burst four years ago. The court began by selecting just 10 individual cases covering the main legal aspects of the mass of suits, some of which name not only Telekom, but also Deutsche Bank, the German federal state and the state-owned reconstruction

23 November 2004

FRANKFURT - A state court in Frankfurt on Tuesday began the massive task of dealing with thousands of lawsuits from over 14,000 shareholders in Deutsche Telekom angered by the loss in value of their stocks since the new economy share bubble burst four years ago.

The court began by selecting just 10 individual cases covering the main legal aspects of the mass of suits, some of which name not only Telekom, but also Deutsche Bank, the German federal state and the state-owned reconstruction bank KfW as defendants.

Also named in the suits is former Telekom boss Ron Sommer, who led the formerly state-owned telecommunication giant's three share emissions in 1996, 1999 and 2000.

The chief allegation of the shareholders is that investors were misled or given insufficient information about the value of Telekom's real estate holdings.

They also claim that Telekom had not adequately informed investors about its acquisition plans, including the costly USD 22.5 billion (EUR 17.2 billion) takeover of the US mobile phone firm VoiceStream.

Those plans were at an advanced stage when the third emission of Telekom shares took place in June 2000. Some 230 million T-Aktie shares were issued at EUR 66.50, with the German state earning some EUR 15 billion from the placement.

In the wake of the meltdown of the dot.com-driven "new economy", Telekom shares are now selling at just EUR 15.90.

Telekom has rejected the shareholders' arguments, saying it provided investors with sufficient information about its holdings. It also noted that the drop in the T-Aktie's value reflects the overall developments in the global telecom and information technology industry since 2000.

Legal analysts see the proceedings as a test of the German legal system, which does not make provisions for mass class-action suits as in the United States.

One shareholders' lobby group said the German system was not up to the task for handling mass complaints of the volume now facing the Frankfurt State Court.

Deutsche Telekom was at the vanguard of the effort to turn Germany into a shareholding society when it first went public in a high- publicity campaign in late 1996.

In November 1996, Telekom placed 713 million shares at a price of 28.50 Deutschmarks (EUR 14.60 ). In June 1999, a second emission took place at a per-share price of EUR 39.50. A year later, with the dot.com sector booming, the T-Aktie was placed at EUR 66.50.

DPA

Subject: German news

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