Eircom likely to splinter in telecoms deal
Eircom's majority owner, Australian-listed fund Babcock & Brown Capital (BCM), said it should benefit from the global credit crunch as it looks for investment opportunities for a Aus$444 (€276.2m) war chest.
It also reaffirmed its commitment to separating Eircom into a wholesale business, comprising its networks, and a retail arm, which sells telecom services directly to customers.
The company is known to be keen to sell off the retail arm, including its mobile phone company Meteor, which would net a total of up to €1.8bn.
BCM recently spent Aus$143.3m (€90m) acquiring the Israeli Golden Pages.
The Australian fund led last year's €2.4bn takeover of Eircom, securing a 57.1pc stake in the Irish telco. BCM's associates own a further 7.9pc and Eircom's employee share ownership play control the remaining 35pc.
BCM boosted its cash pile significantly earlier this year by refinancing half its €474m initial investment in Eircom.
It did this by taking its share of the proceeds from the issuance of a €425m payment in kind (PIK) note, an expensive form of borrowing, saddled in Eircom.
"The directors believe the recent tightening of the credit markets may provide BCM with a competitive advantage in the search for new investment opportunities as it would be able to fund these investments from its own cash reserves," the report said.
BCM'S annual report said that the company continues to explore the option of possibly breaking up Eircom.
The report showed that Eircom's former top two executives, Philip Nolan and Peter Lynch, received up to €4.6m between them in "golden handshakes" on leaving the telco last year when it was taken by Australian-listed fund Babcock & Brown Capital (BCM).
BCM's annual report said that Philip Nolan, former chief executive, had a remuneration package totalling Aus$4.2m (€2.6m) for the year to the end of last June, even though he left the group less than two months into the end of the year.
Similarly, former chief financial officer Mr Lynch took home Aus$3.2m (€2m), although he only worked four months into the year before stepping down.
Dr Nolan has since become chairman both of Sepura, a newly-listed UK maker of radio systems for emergency systems, and Infinis, the UK's largest independent generator of renewable power from landfill.
Mr Lynch took over Irish printing company Oakhill, since renamed as Prime Active Capital.
