Business Irish

Sunday 24 September 2017

Judge to rule on meeting to decide Eircom's fate

Tim Healy

EIRCOM'S creditors will learn today whether a meeting to decide the phone company's future can go ahead tomorrow as planned.

Judge Peter Kelly is expected to rule today on an application to postpone the meeting and force Eircom's examiner to re-engage with the company behind a failed takeover bid.

The case has been taken by Hutchison Whampoa, which owns 3 Mobile and made two bids for Eircom this month, and by an Eircom bondholder DW Investment Management.

It means a proposed survival scheme for Eircom due to be put before creditors at the meeting scheduled for tomorrow could now be delayed as the judge considers the last-minute legal challenge.

The challengers claim the scheme will see Eircom owned by "a collection of banks" and leave it with an unsustainable level of debt.

In court yesterday, Hutchison Whampoa barrister Michael Cush sought to have the court require Eircom's examiner Michael McAteer to withdraw his earlier refusal to enter "phase two" of takeover process for Eircom with Hutchison Whampoa. Mr Cush claimed the €2bn offer for Eircom made by his client was not properly considered by the examiner.

Hutchison Whampoa alleges that "lock-up" restructuring proposals agreed between the companies and senior creditors effectively prevented any exploration of alternative bids for the business being properly considered.

Lawyers for the telecom company said details of the lock-up agreement should have been exhibited to the court.

Moving the application, Mr Cush said it was about the process engaged in by the examiner.

The court and the parties should be satisfied there was nothing in the pre-examinership process that was inconsistent with due process and should allow Hutchison Whampoa the opportunity for due diligence and to advance a viable proposal.

In court, he said the examiner was sticking "rigidly" to a compressed timeframe, which could see the Eircom exit examinership within 60 days, even though the potential time for finalisation of a survival scheme can extend to 100 days.

The "extraordinarily compressed" timeframe for the examinership had effectively allowed a veto to one class of creditors and had curtailed the examiner's ability to investigate and properly consider alternative proposals.

Appraisal

Mr Cush is seeking to have Mr McAteer instructed to complete due diligence and "a proper appraisal" of the €2bn offer.

Hutchison Whampoa is also seeking a deferring the scheduled creditors' meetings.

Both Eircom and Mr McAteer have rejected the claims.

They say they are anxious for the creditors' meetings to proceed in order that the companies involved can exit examinership as soon as possible, the court was told yesterday.

In an affidavit, Mr McAteer rejected claims he had "utterly failed" in his duties as examiner to properly consider alternative investment proposals.

The case continues today.

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