Troubled Affinity Internet shares suspended

Shares in Affinity Internet were suspended from trading yesterday amid speculation the loss-making company, one of the darlings of the dot.com boom, might be forced to throw in the towel.

It was unclear last night exactly why the company was suddenly in trouble and sources said that they did not believe Affinity was running out of cash. Instead, they thought Affinity's creditors, which include BT and Vodafone, were demanding payment although it was unclear whether Affinity was in breach of contract or whether there were other factors at play.

"They [creditors] have been squeezing the firm for ages," one source said. "I can't think it's anything else because they're now, operationally, effectively out of the woods after the sale of their internet division. They [creditors] have just had enough."

Affinity shares were suspended yesterday at 27.5p, giving it a value of just over £9m, "pending clarification of the company's financial position".

One source suggested the company's creditors could well force Affinity into administration if the problems were not resolved. Affinity was refusing to return calls yesterday.

A spokesman for BT confirmed the telecoms giant was owed "some money" but said it remained in discussions with Affinity and other parties and was not withdrawing its telecoms services. "We'd rather see them remain in business," he said. Vodafone would not comment.

After selling its loss-making internet services arm earlier this month, Affinity has been focusing on providing fixed and mobile telecoms services where it uses BT and Vodafone.

The source said it might have been that disposal which sparked the current crisis since some debts were transferred to the buyer of the internet services business, Cleverview Investments.

"It might just be a creditor revolt," the source said. "They are owed money and some of it from Cleverview rather than the quoted vehicle Affinity and they might be a bit uneasy about that."

Ironically, June May, the company's new chief executive, insisted earlier this month that the disposal of the internet services business would improve the company's performance this year.

Affinity's last set of figures, for the third quarter to 30 September, revealed creditors were owed about £17m in total to be repaid within one year.