O'Brien's Digicel group tight-lipped over possible Eircom bid
Published 31/10/2011 | 05:00
Denis O'Brien's Jamaica-based Digicel phone group has remained tight-lipped over reports that it has expressed an interest in possibly acquiring struggling telecom firm Eircom.
On Friday, Eircom, which is in the midst of efforts to restructure its crippling €3.7bn debt pile, told investors it had received an approach "from a third party", but declined to name the suitor.
A spokesman for Eircom declined to comment yesterday, while a spokeswoman for Digicel also declined to be drawn on the report, saying the firm doesn't comment on speculation.
Hong Kong-based conglomerate Hutchison Whampoa, which owns the 3 mobile network, has also been suggested as a potentially interested bidder for Eircom.
Eircom has spent months trying to address its precarious financial position.
It has been forced to engage with lenders in efforts to restructure its debt.
Senior, or so-called first-lien lenders, are likely to be asked to write off 8pc of the funds they're owed in return for receiving a 20pc share of the company, under proposals from existing Eircom shareholders Singapore Technologies Telemedia and the telco's Employee Share Ownership Trust.
The two shareholders would also agree to inject €300m in fresh equity as part of the deal.
Most of the less senior, second-lien debts would be entirely wiped out, placing Eircom on a sounder financial footing.
Eircom said on Friday that it had suffered "significant" reductions in revenues at its fixed-line and mobile businesses in the first quarter to the end of September.
Mr O'Brien, who sold the Esat Telecom mobile business to British Telecom in 1999, netting him about €317m, went on to found Digicel in Jamaica in 2000, taking on the Cable & Wireless incumbent mobile operator and rapidly establishing Digicel as a major player.
During the next decade he expanded Digicel across the Caribbean and into Central America, where it had over nine million subscribers at the end of June and revenues in the three months to the end of June of $601m (€424m).
It also has an operation on some Pacific islands, where it generated additional revenue of $108m (€76m) from two-and-a-half million subscribers in the period to the end of June.
The business has been a phenomenal cash cow for Mr O'Brien. He has grossed hundreds of millions of euro from the company as a result of bond dealings.