Sunday 20 October 2019

Blackstone owns almost one fifth of Eircom, bond prospectus reveals

Donal O'Donovan

Donal O'Donovan

INVESTMENT giant Blackstone's stake in Eircom is more than three times the size of the next largest shareholding in the business, according to a bond prospectus prepared by the company.

The prospectus is part of a marketing effort to attract investors to a €310m bond issue that Eircom plans to raise on the markets in order to repay part of its current €2.36bn of senior loans.

Last week, Eircom hired investment banks Goldman Sachs and JPMorgan to arrange the high-yield bonds deal.

The investment banks have begun a roadshow or marketing exercise ahead of the bond auction – which is expected over the coming week.

The prospectus reveals that €10m of the €310m that Eircom plans to raise will go to pay fees and expenses associated with the debt raising.

The balance of €300m will be used to redeem €326m of Eircom's current outstanding loans, at 92 cents in the euro. That money ultimately goes to Eircom shareholders.

Eircom's loans are owed to the same group of lenders who took ownership of the company last year, after the then over- indebted business was forced into examinership.

Ownership of the company was stripped from Singapore-based STT and an employee share scheme and handed to secured lenders.

Steve Schwarzman's Blackstone, including its GSO and Harbourmaster units, owns 18.6pc of Eircom. Blackstone was known to have become the biggest shareholder after the "debt for equity swap", but the extent of its dominance was not known.

Suffered

The next biggest stake in Eircom is held by financial investor Alcentra, which holds 5.12pc, followed by Anchorage with 3.48pc, Dublin-based Avoca with 3.28pc and Silver Point holds 2.95pc.

The top five Eircom shareholders own a third of the company. More than a hundred other investment firms and funds own the remaining stake.

That includes funds that hold their investment indirectly through a vehicle called Eircom Holdings Ireland Ltd.

Its holding of 5.38pc of shares is listed as the number two shareholder on the bond filing but the figure is understood to represent the aggregated stake of a number of funds.

The fact that the company is able to access the bond market at all is striking. Bondholders suffered the bulk of loses when Eircom walked away from €1.8bn of debt under 2012 examinership. In contrast, the holders of better secured loans suffered a loss of just 15pc on the debt they were owed and were handed the company, under the deal.

Irish Independent

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