British telecoms group Colt has denied claims by one of its creditors that it cannot repay its debts and should be put into administration.

Colt said on Wednesday that the claims were "entirely without foundation".

The company said it was "confident" it would be able to make its repayments, pointing out that it had £1bn ($1.56bn) in cash and no bank debt.

Colt was responding to news that Highberry Limited, a New-York based hedge fund which owns Colt bonds, planned to ask the courts to put the telecoms firm into administration.

Colt said Highberry intended to argue in court that the firm will be unable to repay or refinance bonds which fall due between 2005 and 2009.

Watertight

Putting Colt into administration would provide legal guarantees that bondholders and other creditors would get at least some of their money back, but would leave shareholders nursing heavy losses.

The telecoms firm described Highberry's move as "a self-serving attempt to force an unjustified transfer of value from shareholders to bondholders".

Highberry's claim comes as Colt is struggling in the face of a protracted slowdown in the global telecoms industry.

Last month the company announced plans to lay off 800 workers, about one sixth of its workforce.

The firm, which is focused mainly on providing telecoms services to businesses, earlier this year won the contract to provide the technology underlying controversial plans to levy a congestion charge on motorists in central London.

In the City, Colt shares were 0.75p higher at 35p in late afternoon trade.