Potential bidders miss deadline as Eircom sale extended
The owners of Eircom have been given another two weeks to come up with proposals to restructure the company's crippling €3.4bn debt pile and alter the group's ownership structure.
Eircom had set a deadline of yesterday for submissions on how to tackle its debt mountain, with current owners Singapore Technologies Telemedia (STT) and Eircom's Employee Share Ownership Trust (ESOT) having worked on a joint proposal.
But in a surprise development, the pair hadn't submitted their proposal by yesterday's deadline. However, it was always perceived to be a flexible date. STT and the ESOT have been working to hammer out a solution acceptable to so-called first-lien lenders to Eircom, who are owed about €2.4bn.
However, second-lien lenders owed about €350m from Eircom did submit a proposal yesterday.
It was the only formal proposal received by Eircom's independent directors so far. Earlier this week, telecoms group Digicel, owned by Denis O'Brien, said it would not proceed with a bid for Eircom.
A spokesman for the second-lien group confirmed that those lenders did submit a proposal "in line with our original proposal discussed with the first- lien committee and independent [Eircom] directors".
That proposal is believed to focus on relinquishing about 30pc of their €350m debt and converting the remainder into a type of subordinated mezzanine tranche.
Eircom's independent directors confirmed yesterday that their deadline for receipt of proposals had been extended to December 2 to allow interested parties "a further period of time to prepare and refine their submissions".
STT's and the ESOT's offer was expected to recommend that Eircom's senior lenders take a 20pc stake in the company in return for slashing the €2.4bn in debt they control.
The likely proposal would result in a total of €300m in equity being injected into Eircom, which it was thought STT would be keen to see invested in improving the telco's network infrastructure.
The move would see STT, which owns 65pc of Eircom, stump up the bulk of the equity -- about €200m.
The ESOT would come up with close to €50m. It currently owns 35pc of Eircom.
It has been speculated that London-based private equity group Communications Ventures Partners will join forces with the pair and bridge the remaining funding gap to bring the new equity total to the €300m mark.