Eircom in move to secure fresh covenant waiver
Reduced spending, failing businesses and competition seen as cause of loan agreement woes
EIRCOM will seek a fresh covenant waiver next week from its senior lenders as it updates its financial projections in light of the deteriorating economic Irish environment.
The struggling telco, which is likely to be taken over in coming weeks by senior lenders owed more than €3.7bn, will seek to extend the waiver beyond its January 31 date.
The company has breached lending agreements after sharp declines in its earnings as consumers rein in spending and business customers cut costs and fail.
Eircom said the update to its financial projections currently being undertaken would take into account its half-year results to the end of December.
The update is expected to be concluded by the end of this month, it said.
It added that the business plan continued to be built upon a strategy of network investment in high-speed fibre broadband.
Ratings agency Moody's downgraded Eircom last month in light of the poor state of the Irish economy and increased competition facing the company. Eircom has said that it suffered a "significant reduction" in performance during the month of October.
The telco also said yesterday that, due to the increasing workload associated with its balance sheet remediation process and the management of the group's overall business performance, it was separating the role of chief financial officer and chief restructuring officer.
Mark Wilson had held both roles. However, Eircom has now appointed Michael Corner- Jones, the managing director of restructuring group Alvarez & Marsal, as chief restructuring officer. Eircom hired the firm last year to advise it on its restructuring process.
Senior lenders owed €2.4bn by Eircom have offered to write off about 8pc of the debt in return for taking control of the company.
Eircom is 65pc-owned by Singapore Technologies Telemedia (STT), with the remainder controlled by the Employee Share Ownership Trust (ESOT).
STT has effectively given up trying to retain the stake after its offers of a restructuring plan were rebuffed. STT directors have resigned from the Eircom board.
The ESOT also warned its members last week that it might not have any role in Eircom's future.