ESOT eyes Babcock & Brown Capital move as exec resigns
Pierre Danon, chairman of Eircom (left) with Rob Topfer, who has just resigned as executive director of Babcock & Brown Capital
Eircom's Employee Share Ownership Trust (ESOT), which owns 35pc of the telecommunications firm, is considering a stake in its majority owner Babcock & Brown Capital (BCM) as it considers the future of the former state-owned telco.
Sources said that this is just one option being considered by ESOT in relation to the future ownership of Eircom and comes on news of the resignation of Robert Topfer, the architect of Babcock's debt driven acquisition of Eircom which was completed two years ago.
Mr Topfer's departure from the board has increased speculation that he is planning to make a separate bid for the Australian listed fund BCM but it is expected that ESOT will take a "wait and see" approach to the situation and is not in any rush to make a move.
ESOT, which is owned by former and current Eircom employees, is being advised on its options by NM Rothschild and Merrion Stockbrokers. Following Mr Topfer's departure, two Babcock executives remain at Eircom and the company is currently looking for a new chairman who will replace Pierre Danon.
New figures seen by the Irish Independent show that, based on BCM's current share price, the fund's 57.1pc stake in Eircom is valued at about €230m.
Debt
Eircom, which also has over €4bn in debts on its books, has denied a number of recent reports that the company is for sale against the backdrop of troubles at its ultimate owner Babcock & Brown Capital -- the Australian bank which also has an 8pc stake in Eircom as well as in BCM.
The assets owned by BCM are Eircom and the Israeli Golden Pages. Currently Babcock and BCM are reviewing an arrangement whereby BCM pays controversial management fees to Babcock. It is understood that it would cost the fund as much as €27m to buy out the fee which still has 23 years to run.
It is also believed that if the deal was made, Babcock would remain as a shareholder in BCM. A share buyback at BCM, which has about €180m surplus capital, was recently suspended pending the outcome of the talks on the Babcock rights buyout.
Babcock recently said it is shifting its core focus to just three areas as it tries to rebuild investor confidence in the group.
The bank has been hammered by falling financial markets after it accumulated assets using a highly leveraged model. It has also lost a number of top executives.
Earlier this month, and less than three weeks after being controversially installed as a non-executive director of Babcock & Brown, Phil Green suddenly resigned from the board.
- Ailish O'Hora Business News Editor
