Singapore back in Eir four years after STT tilt for the Irish telco
Published 11/06/2016 | 02:30
Singapore's state-backed investment powerhouse GIC will become the latest addition to the former Eircom's well-thumbed shareholder register.
The renamed Eir said yesterday that GIC plans to invest up to €230m for a minority stake in the business.
The deal will value Eir at €3.3bn - the same level as a takeover approach from a still unnamed bidder rejected by the company last year.
GIC, which is one of the world's largest global investors, intends to buy the stock at a price of €232 per share from existing shareholders.
The offer creates a so-called liquidity event, or chance to exit, for smaller shareholders including some who have held stakes since swapping loans for equity in the business as a result of the 2012 debt restructuring.
Two years ago the Irish company cancelled plans for a stock market listing, which would have made it easier for the dozens of mainly international funds that own shares to sell down their stakes.
Since then once biggest shareholder Blackstone has cut its stake, selling out to Anchorage Capital Group. Following the deal with GIC Anchorage will remain Eir's biggest shareholder, with over 35pc of stock.
Back in 2009, GIC's home town peer STT, which is also state-owned, bought a majority stake in Eircom for €40m, at a time when the business was struggling under a massive debt pile built up under a series of owners. The move was intended as the prelude to an owner-led debt restructuring, buying STT a seat at the negotiating table.
At one point STT proposed investing a further €200m into Eircom as part of a rescue strategy, but the Singaporean fund ultimately lost control of the restructuring process. Senior lenders, led by Blackstone, were able to wrestle control of the business after Eircom defaulted on its massive debts.
Given Eir's national importance as the country's biggest telecoms provider, and a history of underinvestment linked to repeated changes of ownership, any bid for Eir is likely to raise concerns.
Presiding over the 2012 Examinership, Judge Peter Kelly compared the history of Eircom to a game of "pass the parcel" where everybody won except the parcel.
However, GIC is regarded as a long-term investor, charged with generating returns for Singapore's pension system.
GIC's offer sets the scene for it and Anchorage to coalesce as cornerstone investors, and appears to make a public listing of Eir less likely.
1999: Privatisation of Telecom Eireann
2001: Eircom sells mobile subsidiary Eircell to Vodafone.
2001: Eircom is bought by Valentia, a consortium led by businessman Tony O'Reilly and is delisted from the stock exchange.
2004: The company returns to the stock market
2005: Eircom buys Meteor for €420m
2006: A majority stake in the group is sold to Australian investment group Babcock and Brown alongside staff.
2009: Singapore Technologies Telemedia buys Babcock and Brown's stake.
2012: Lenders led by Blackstone swap debt for equity to gain control of the company.