Tuesday 25 July 2017

Eircom chiefs to hold talks with lenders on €3.7bn debt

Meeting in London next week will focus on restructuring

Donal O'Donovan

Donal O'Donovan

MANAGEMENT at Eircom will travel to London for a meeting next Friday with the telecom company's senior lenders, a spokesman confirmed last night.

The syndicate includes dozens of investment funds and banks that hold Eircom's most secure loans.

Eircom has debts of €3.7bn, most of it owed to a group of "senior lenders" through very well secured loans.

The meeting is being held so company executives can present detailed financial data to the lenders and circulate an independent business review put together by Ernst & Young.

The financial data will include the corporate earning projections that are ultimately likely to be used to determine how much debt should be wiped out in a restructuring.

The meeting is a sign Eircom's debt talks are heating up. Having the lenders together in one place will also provide an opportunity to vote on whether to give the company a waiver, freeing it from the risk of going into default if it fails to comply with the conditions on its loans at the end of August.

Specialist newswire Capital Structure reported last night that Eircom's main shareholder, Singapore Technologies Telemedia, has already come up with its preferred plan to restructure the company's debt. But it said it was not yet clear if that would be discussed at Friday's meeting.

This meeting is with a large and diverse group of lenders, but the company is already in talks with a co-ordinating committee representing the wider group.

The committee was formally recognised just over a week ago and is made up of investment funds Alcentra, Avoca, GSO and Harbourmaster, of which Avoca and Harbourmaster are based in Ireland.

The committee also includes Deutsche Bank and Sumitomi Mitsubishi Bank Corp.

Despite increasing contact between the company and its senior lenders, there is no sign that Eircom is engaged with its more junior lenders.

These hold a variety of types of corporate debt in the form of lower-ranked "second-lien" debt, unsecured bonds and a chunk of very weakly secured payment in kind notes.



Negotiating

These lenders have formed into active groups in recent months, but they can't force Eircom to the negotiating table because their debt has much looser terms and conditions than those that protect the senior lenders.

The junior lenders won't be entitled to a role in the debt talks unless Eircom actually misses a debt payment. There is interest falling due on some bonds next month, but the company has made it clear that it has plenty of cash to meet the bill.

While debt talks rumble on, Eircom is cracking ahead with efforts to make its own operations more efficient.

Last night, the company said it was reforming the way it operated its wholesale division, which sells line capacity to third-party providers.

The wholesale business is regulated by Comreg but an Eircom spokesman told the Irish Independent the changes were happening on Eircom's own initiative.

These include rebranding the division and setting up a dedicated sales and service team to deal with the wholesale customers, but there are understood to be no new large-scale costs involved.

The wholesale unit is staying within Eircom and will be headed by Chris Hutchings, recently appointed MD for wholesale.

Irish Independent

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