Singapore company to take over Eircom 'by the end of next week'
Paul Donovan, the former Vodafone Ireland boss, was recently made chief executive of Eircom.
Friday August 14 2009
Former state telecoms firm Eircom will be sold off to Singapore Technologies Telemedia (STT) by the end of next week, sources close to the deal have confirmed to the Irish Independent.
STT recently offered a revised bid worth a total of about €130m for Eircom's Australian parent Eircom Holdings (ERC), formerly known as Babcock & Brown Capital.
When a deal is concluded, STT will hold about 51pc of the new vehicle bidding for the parent, known as BidCo, while the Eircom Share Ownership Trust (ESOT), which already owns 35pc of Eircom, will transfer its stake to the new firm which will be registered in the Cayman Islands.
The ESOT has already informed the Revenue Commissioners of its plans to transfer its existing stake to the new vehicle and it is understood that the tax treatment of the trust will not be altered as a result of the deal.
Close
Following conclusion of the deal, Och-Ziff Capital Management, one of the world's largest hedge funds, will own about 7pc of BidCo, while the remaining 7pc will be held by a number of other shareholders.
The deal is close to being concluded with a number of issues yet to be ironed out, including an agreement on the management fee to be paid by STT to run Eircom.
The STT side of the deal is being headed up by STT's head of international business development, Anupam Garg.
ERC's chairman Kerry Rosburgh, has been in Singapore and Dublin recently as the deal edged closer to being signed.
STT representatives have also met members of the Government and both sides have had preliminary talks on their plans for Ireland's beleaguered telecommunications infrastructure.
It is understood that investment by STT in Eircom has been discussed as have government plans for a next generation network to upgrade broadband speeds across the country.
The prospect of Eircom being taken over by a telecoms firm is a new departure for the incumbent which has been in private ownership for almost all of the 10 years since its flotation in which many investors lost millions following the collapse of the firm's share price.
Now, Eircom is laden with debts of over €3bn. It is also struggling to fight off competition from the mobile sector and has also been hit by the recessionary environment.
The €130m price represents the debt level at Eircom.
It is understood STT will expect handsome returns for its investment in Eircom and the proposal terms include a clause that would mean Eircom returning to the stock market as early as 2011. This would provide STT with means of cashing in through the sale of shares.
The proposal also includes a clause whereby STT would be entitled to a performance fee in certain circumstances if existing shareholders sold out after making a return.
Paul Donovan, the former Vodafone Ireland boss, was recently made chief executive of Eircom.
- Ailish O'Hora Business News Editor
