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BT bosses could be forced out

Investors may demand the heads of British Telecom's chairman and chief executive as the price of their continued support. Chairman Sir Iain Vallance and chief executive Sir Peter Bonfield are likely to be asked to quit as the price of support for a rights issue. It is needed to support BT's growing 30billion debt mountain. The crunch is likely to come on Wednesday when executives are due to meet major shareholders. City institutions are almost certain to demand that heads role if they are to subscribe for more shares. They are angry that Sir Iain and Sir Peter have failed to prevent a 60 percent fall in BT's share price in the past year. The company's shares are now at their lowest price in two years. Tumbling stock markets have ruined plans to raise 10billion to cut debts by floating BT Wireless, its mobile phone arm, and Yell, its Yellow Pages division. Management may have little choice but to ask shareholders to stump up the cash for a discounted rights issue to raise about 5billion. Sir Iain has dominated BT since privatisation in 1984 and is not due to retire until July next year. A BT spokesman said yesterday there were no plans to for Sir Iain to step down before that date. But analysts believe shareholders may leave BT with little choice. BT faces a downgrading from credit rating agency Standard & Poor's next month. If this happens, the company will face paying up to 200million more in interest charges.

Article copied from METRO newspaper