Eircom lenders fight to come out on top in takeover bid
Published 14/10/2011 | 05:00
SOME of the lenders owed €3.7bn by Eircom will table a takeover proposal as early as next week, according to people involved in the talks.
The Eircom story features half a dozen classes of investors all locked in a battle to come out on top when Eircom "restructures" its balance sheet.
Analysts say any viable plan must wipe out at least a billion of debt.
One group in the mix are 'second lien' lenders owed €350m. The Irish Independent has learnt that they will offer to swap their loans for a stake in Eircom, probably alongside managers and Eircom's employees, at talks next Monday.
The loans might then be reinstated, but without interest payments, cutting the yearly cost to Eircom. The talks are with the top-ranked lenders, not the company or its owners.
Kingmakers in the Eircom talks are the top ranked 'first lien' lenders owed €2.36bn.
They are first in line to be repaid and have better loan security than other investors.
The 'first lien' have the deciding vote over any restructuring plans so any other group that can secure their support stands a good chance of recovering money from the Eircom crisis.
Last week Eircom's majority owners STT made its bid for backing from the first lien group.
STT offered the first lien group 20pc of Eircom shares plus around €300m in early debt repayments, in exchange for cancelling 8pc of the €2.36bn they are owed.
STT would remain on as majority owners under the plan and other lenders would be wiped out.
Such a scheme would need a court order to become effective, because all other financial debt -- owed to a different set of investors -- would be written off.
STT made its pitch to a co-ordinating committee that represents the top lenders.
Last Monday the committee filled the rest of the 200-strong syndicate in on the STT plan.
Non-committee members that spoke to the Irish Independent said they were disappointed to be asked to write off any of their loans.
Many of them are investment vehicles backed by pension and insurance funds. They are under pressure from their own investors to avoid any losses on loans, even in exchange for shares.
STT's plan opened the door for rival proposals that can win over the disgruntled members of the top tier group.
On Monday the second lien lenders will outline their rival plan to representatives of the top group.
The second lien lenders are expected to propose taking a loss on their own loans in exchange for a share in the company. It is not yet clear if they will offer to put any new money into the company but it will leave the top Eircom lenders loss free.