Wednesday 28 September 2016

Blackstone remains a major Eircom lender as equity stake cut to 5pc

Published 21/05/2015 | 02:30

Eircom announced on Tuesday it had rejected takeover offer
Eircom announced on Tuesday it had rejected takeover offer

Blackstone's Dublin-based debt investment unit is understood to have retained its stake in Eircom loans, despite the group slashing its shareholding in the business to 5pc.

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New York-based Anchorage Capital has become Eircom's biggest single shareholder, lifting its stake from 8pc to 33pc after a deal to buy the bulk of Blackstone's former stake.

Eircom announced on Tuesday that it had rejected a takeover offer of between €3.2bn to €3.3bn from an unnamed bidder because it undervalued the business.

That was despite pulling a planned sale or stock market flotation last year, when the valuation was thought to be around €3bn.

Blackstone played a lead role in the 2012 "loan to own" process that saw control of Eircom stripped from previous owners Singapore Technologies Telemedia (STT) and an employee share trust and handed to its senior lenders through an Examinership.

Blackstone emerged as both the biggest shareholder and biggest lender to Eircom at the end of that process, with a holding of just under 30pc.

After the examinership the 200 strong investor group that came out in control of the group agreed to "staple" the shares and loans they held so that any investor cutting their debt stake had to also reduce their equity.

The staple was agreed to prevent a repeat of the previous deadlock between groups of lenders and shareholders who had struggled for control of the group over the two years prior to the examinership.

As the group's finances stabilised last year the investors voted to scrap the staple, allowing the shares which are valued at around €1bn and debts of €2bn to be bought and sold independently.

It is understood that Blackstone has now taken advantage of the end of the staple, to cash out of much of its shareholding which is being cut from 30pc to 5pc in a deal with fellow shareholder Anchorage Capital, without exiting its debt position.

As a result New York-based Anchorage Capital has become Eircom's biggest single shareholders. It had been the second biggest Eircom shareholder.

In a stock market listed company, raising its stake to 33pc would be likely to trigger an automatic requirement to make a formal bid for a full takeover, though that does not apply at privately-owned Eircom.

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