Sunday 24 September 2017

Lenders get Eircom after 3 Mobile's second €2bn bid rejected

Independent.ie reporters and Donal O'Donovan

A second €2bn bid by 3 Mobile to buy Eircom has been rejected paving the way for its lenders to take control of the company.

The offer was made by smaller telecoms rival 3 Mobile, which is owned by Hong Kong-based Hutchison Whampoa -- a global player in the sector with a war chest for European takeovers of around €8bn.

It is understood that Eircom's court-appointed examiner Michael McAteer turned down the cash offer for Eircom because the €2bn cash bid was seen as too low, and because the bidder was insisting on completing due diligence, that could have delayed Eircom's exit from insolvency, before handing over the cash.

Sources close to the bidder expressed frustration at the entire process, and complained that 3 Mobile executives never got as far as meeting with the examiner to negotiate terms, despite the size of their offer.

Mr McAteer could not be reached for comment.

Rejection of the cash bid clears the way for Eircom to be handed to its top lenders later this month, when the company is set to exit examinership.

Scheme

The scheme to give the company to lenders was negotiated before it collapsed into insolvency at the end of March with debts of €4bn.

Rejection of the offer from 3 Mobile means Eircom is to be handed to a 200-strong group of lenders led by US investment firm Blackstone at the end of this month.

Sources close to the failed '3' bid say that ends the prospect of a telecoms company, rather than financiers, owning Eircom in the near term.

The same sources rejected suggestions that 3 should bid for Eircom again after the examinership.

They said all Irish telecoms would be barred from any kind of talks once a sale of new licences kicks off this summer.

Eircom was forced to seek examinership in March when lenders called in part of the massive €4bn of debt run up by the company under a succession of owners.

The company had to seek court protection to prevent it from being liquidated.

The plan to hand the company to some of those lenders in exchange for debt forgiveness will wipe out €1.8bn, or 40pc, of the debt burden.

Lenders and managers believe that could return the business to financial health.

Irish Independent

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