Shares in Versatel, the Dutch telecoms group in which eIsland chairman Mr Denis O'Brien has a 5 per cent stake, are in danger of being suspended by the Amsterdam Stock Exchange (AEX), according to a report in the Dutch newspaper De Telegraaf.

The report suggested that Versatel could be suspended if its equity base turned negative. Versatel's shareholder equity fell to #214 million at the end of March from #341 million at the end of December. But analysts at ABN Amro believe the concerns over a suspension are overplayed.

"Versatel is in discussions with the AEX and the likelihood is that it would be placed on the `penalty bench'," said the broker.

The possibility of Versatel being put on the AEX's penalty bench was not new, but the fact that it was reported in the media generated fears that it might trigger selling by Versatel's small shareholders. The penalty bench carries a negative connotation but does not interfere with share trading. Versatel's difficulties with the AEX came as the telecoms company announced sharply higher losses in the first quarter, rising #51 million to #131 million. Losses per share were #1.46.

Chairman Mr Raj Raithatha said the losses before tax, interest charges and write-offs actually fell from #28 million in fourth-quarter 2000 to #26 million first-quarter 2001.

Analysts were sharply divided on the results and the prospects for Versatel. ABN Amro said the results reinforced its view that the company was on track to deliver good news through the second quarter.

Although the results were in line with consensus forecasts, Versatel shares fell sharply again yesterday, partly due to the concern over a possible suspension, and partly on profit-taking after they had risen sharply ahead of the results.

Versatel shares fell #1.24 to #5.31 yesterday, valuing the company at #476 million and Mr O'Brien's stake at #24 million. Mr O'Brien's stake in Versatel was worth #214 million when the shares peaked at #47.90 almost a year ago.