Eircom staff are in debt shake-up
Published 18/10/2011 | 05:00
EIRCOM's managers and employees could take a significant new stake in the company under a debt-for-equity swap proposed by lenders that want to take control of the company.
Eircom's owners and lenders are locked in multilateral negotiations to slash at least €1bn of its €3.7bn of debt. Yesterday the most senior Eircom lenders, owed €1.63bn, and a group of "second lien" or second tier lenders owed €350m met for talks in London.
These second lien lenders offered to swap €100m of their debt for a major stake in the company.
The remaining €250m they are owed would be swapped for less high-grade "mezzanine" loans, paid only a small amount of cash in interest each year.
The offer is designed to appeal to the more senior lenders, who have the pivotal role in the Eircom talks because they are first in line to be repaid by the company.
The second lien team said their proposal could be executed under UK law, so Eircom can avoid examinership.
Under the plan, management at Eircom and employees that own 35pc of the business could also be invited to come into the deal as owners.