Monday 20 May 2019

Eir to part-fund €300m dividend with new debt

In control: Billionaire Xavier Niel bought Eir last year. Photo: Marlene Awaad/Bloomberg
In control: Billionaire Xavier Niel bought Eir last year. Photo: Marlene Awaad/Bloomberg
Donal O'Donovan

Donal O'Donovan

Eir's controlling shareholder will not share in any of a €300m dividend partly funded by new debt, the Irish Independent understands.

News yesterday that the company intended to make a debt-funded payment to shareholders inevitably invoked memories of the ratcheting up of debt by a series of previous owners before the former Eircom collapsed into insolvency in 2012.

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The company said yesterday that it plans to borrow €850m in a mix of senior loans and high-yield bonds due to be repaid in 2026, with proceeds going to repay €700m of bonds that fall due in 2022, to put cash on the balance sheet and to pay fees and expenses.

Eir has not commented on the dividend plans. However, rating agencies Moodys and Standard & Poor's, both said part of the proceeds of the new debt will go towards funding a €300m payout to shareholders, which will also be funded by €60m of cash and temporary drawings under a revolving credit facility - a kind of corporate overdraft.

The dividend and financing process are separate sources said.

The dividend will be paid to 26.6pc shareholder Anchorage Capital and 8.9pc shareholder Davidson Kempner Capital, they are the last of the hedge funds that gained control of Eir as a result of the 2012 examinership when lenders forced out previous equity owners

At the High Court in 2012, Mr Justice Peter Kelly called the preceding cycles of borrowing and new owners at Eircom a "corporate game of pass-the-parcel" in which "the parcel lost".

French billionaire Xavier Niel gained control of Eir last year, its ninth change of ownership in the past two decades, in a deal that valued the business at €3.5bn.

The French telecoms entrepreneur acquired 64pc of Eir via Iliad, the French telecoms group he controls and NJJ, his personal investment vehicle.

Irish Independent

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