Business Irish

Tuesday 14 August 2018

Eir managers get €100m as buyer rules out IPO

French billionaire Xavier Niel has lead the bid to buy a majority stake in Eir. Photo: Christophe Morin/Bloomberg
French billionaire Xavier Niel has lead the bid to buy a majority stake in Eir. Photo: Christophe Morin/Bloomberg
Donal O'Donovan

Donal O'Donovan

The French funds behind what's effectively a ninth takeover of Eir in two decades have categorically ruled out any plans to flip the country's biggest telecoms provider, or to independently list the company on the stock exchange.

A bid group led by French telecoms billionaire Xavier Niel confirmed yesterday that it will buy an almost two thirds stake in Eir, in a deal understood to value the company at €1.5bn.

Eir's executives led by CEO Richard Moat stood to share a windfall of as much as €210m in the event of a full sale or IPO under a management-incentive scheme, but will instead share about half that figure when €100m of shares held for 45 executives are bought as part of the deal.

A significant share of the €100m is likely to go to the top three to five managers. Mr Moat said yesterday he plans to leave Eir. Sources close to the buyer said a new CEO has not yet been selected.

A change of control clause triggered by the sale means holders of about a third of Eir's €2.1bn of debt have a right to be repaid, once the acquisition completes.

The company will launch a consent solicitation to lenders in January, most likely offering a one-off fee to those who opt not to be repaid early.

Under the terms of the transaction, listed French telecoms investor Iliad will buy a 31.6pc stake for €320m, while NJJ will buy 32.9pc. Xavier Niel owns 52pc of Iliad, while NJJ is his private investment vehicle.

Olivier Rosenfeld, a partner in NJJ and long-time associate of Xavier Neil told the Irish Independent that the plan is to hold the business for the long term.

"We intend to hold this business in perpetuity. It is not a trade, not a buy-to-sell," he said.

He also ruled out a stock market listing for Eir.

"We're absolutely not going to IPO Eir."

Under a deal within the deal, Iliad will ultimately take over the bulk of the NJJ stake, but that is the only transaction on the horizon, the French executive said.

Analysts said NJJ's role means Xavier Niel can close a takeover of Eir but keep Eir's debt off Iliad's own balance sheet. Iliad operates the Free telecom service in France and is expanding in Italy.

Before the deal, Eir's largest stakeholders were US hedge fund Anchorage Capital, Singapore's GIC and US investment firm Davidson Kempner. Anchorage and Davidson Kempner will share a 35pc stake after the sale, and all other shareholders will exit.

 

Timeline

1984: Telecom Éireann is founded.

1999: Privatisation of renamed Eircom is biggest IPO in the history of the State.

2001: Eircom sells mobile subsidiary Eircell to Vodafone. Eircom in turn is bought by Valentia, a consortium led by businessman Tony O’Reilly. It is delisted from the stock exchange.

2004: Return to the stock market.

2005: Eircom buys Meteor.

2006: Australian investment group Babcock and Brown buys majority stake.

2009: Singapore Technologies Telemedia buys Babcock and Brown’s stake.

2012: Insolvent Eircom goes into Examinership with €4bn of debt. Ownership transfers to lenders led by Blackstone.

2014: Planned IPO is shelved.

2015: Eircom is renamed Eir. Blackstone replaced by Anchorage as biggest minority shareholder.

2017: French billionaire Xavier Niel leads bid to buy majority stake.

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