Tuesday 23 January 2018

Earnings at Eircom's mobile arm 'significantly' down


John Mulligan

Earnings at Eircom's mobile business, including its Meteor division, were "significantly lower" in the fourth quarter of its financial year compared with the previous three months, the company has told investors.

It has also written €1.3bn off the value of the group due to the outlook for the business and the Irish economy. That is a non-cash charge, however.

Eircom made the disclosures as lenders mull a decision to strike a deal that will help the troubled telecoms operator avoid breaching debt covenants in return for paying senior lenders a one-off fee totalling €13.5m.

Sources familiar with negotiations said the expectation was that the majority of approximately 200 senior lenders who hold about €2.75bn of Eircom's debt would agree by next Tuesday to the deal.

"It's in no one's interest for this not to work," one source told the Irish Independent.

A two-thirds majority is required for the covenant waiver to be passed by lenders.

Eircom will then effectively have a three-month window to fine-tune restructuring proposals that could see it write off as much as €1bn of its debt pile in exchange for investors -- including shareholders Singapore Technologies Telemedia and the Employee Share Ownership Trust -- injecting up to €300m in cash into the group.

Moelis, a boutique investment bank that is an adviser to a group of so-called second-lien Eircom lenders, has been pushing to establish a formal creditor committee representing their interests in the group's restructuring. Moelis had given a deadline of yesterday for second-lien lenders to agree to the committee's creation.

Eircom said that despite the decline in earnings before interest, tax, depreciation and amortisation (EBITDA) at its mobile operations, overall group EBITDA before exceptional items in the quarter to the end of June was "in line" with the figure reported in the third quarter.

Irish Independent

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