Legal Bun Fight Over VoIP Deal Escalates

The legal proceedings between IP Telephony Softswitch developer, Transcom, and Adelaide-based ISP, Chariot, heated up outside the courts this week as Transcom’s Queensland-based subsidiary accused the ASX-listed Chariot of misleading the market.

Chariot has issued a statement to the ASX denying the allegations and reiterating that it intends to fight the Breach of Contract claims in the Queensland Supreme Court.

A story in the Adelaide Advertiser reported that Nav Basi, director of the Queensland-based subsidiary of Transcom International claimed Chariot’s failure to properly inform the market the two had restructured their deal has led to the court action.

In a recent announcement to the Australian Stock Exchange, The Adelaide-based ISP explained away the legal action saying: “The claims by the Transcom companies arise from agreements between them and Chariot and the termination of a wholesale distribution agreement under which certain products and services were expected to be made available to the Australian telecommunications market.”

But Transcom director Nav Basi, didn’t quite agree with that assessment when approach by the Advertiser.

The two got into bed in late 2004 when Chariot invested $5 million to acquire a 37.74 per cent stake in the London-based Transcom International and a further 80 per cent stake in the Transcom Australia subsidiary as well as a licence agreement valued at $1 million.

The idea was to roll-out a VoIP telephony service in Australia.

Initially due for launch in late 2005, the two rescheduled the start of the service for late 2005 citing technical issues. It never did appear despite Chariot telling another news outlet in February this year that the service was still in the works.

But Basi claimed that the agreement was restructured in late 2005, with Chariot abandoning its 80 per cent share of the subsidiary and licence agreement instead agreeing to enter into a wholesale distributor agreement with Transcom.

Navi claims the deal was restructured because Chariot did not honour contractual obligations to fund and resource Transcom Australasia.

Consequently, Transcom International is seeking $3.2 million from the ISP and is also making a claim against Chariot directors Peter Buttery and Robert Horlin-Smith.

Chariot recently issued an EBITDA downgrade to the market has increased its debt profile.

Chariot MD, Robert Horlin-Smith, told The Advertiser that the restructure improved the company’s debt position and indicated there could be another restructure on the horizon which would seek to raise money to invest in Chariot’s wireless internet infrastructure.

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