Court rules Deutsche Telekom misinformed investors in 2000 share offer
FRANKFURT (Reuters) - Germany's supreme court (BHG) ruled on Thursday that Deutsche Telekom failed to adequately inform potential investors buying shares in its public share offer at the height of the tech market bubble in 2000, but stopped short of ordering the group to compensate shareholders.
The long running case was brought to court by about 17,000 Deutsche Telekom shareholders who are claiming 80 million euros (63.2 million pounds) in compensation for a fall in its share price following the sale in 2000, the third tranche of state-owned shares to be sold.
The shareholders have said that Deutsche Telekom had been too optimistic about the valuation of the company in the sales prospectus and the prospectus had misled potential investors.
About 70 percent of the 200 million shares on offer at 66.50 euros apiece were bought by retail investors, who considered it a safe and stable investment.
Only eight months later, Deutsche Telekom announced a write-down on the valuation of its real estate portfolio, sparking a slide in the shares, which now trade at around 13 euros.
Hearing an appeal against the dismissal of their case by a lower court in 2012, the supreme court said in its ruling on Thursday that Deutsche had wrongly suggested in the prospectus that it had sold shares in U.S. operator Sprint in 1999 at a profit of 8.2 billion euros.
In reality, Deutsche Telekom had transferred the shares to its 100-percent owned NAB Nordamerika Beteiligungs Holding GmbH. According to the court, it failed to warn investors that it was still bearing the full risk of a potential drop in the valuation of Sprint.
"In that regard, the prospectus is objectively wrong," the court said in a statement, adding that this could not have been clear even to investors who know how to read a balance sheet.
The supreme court has referred the case back to the regional court in Frankfurt, which will now have to establish whether Deutsche Telekom will have to pay damages.
A Deutsche Telekom spokesman said the company was disappointed that the supreme court had ruled that the prospectus misinformed but it was confident the regional court would decide not to compensate investors for the fall in the share price.
(Reporting by Harro ten Wolde and Peter Maushagen; Editing by Arno Schuetze and Greg Mahlich)
