Eircom ‘actively reviewing’ options on debt
Telecoms company Eircom said it’s "actively reviewing" options to prevent it breaching conditions on its debt.
The company generated cash flows of €136m in the year ending June 30 and had a cash balance of “almost” €400m, it said in a statement today.
Still, net debt remains “very high and in the absence of action by Eircom, the associated financial covenants may be breached within the coming 12 to 18 months,” according to the statement.
“Given the very difficult economic environment, revenue pressures continue on the business,” Chief Executive Officer Paul Donovan said on a conference call to discuss its earnings today.
Eircom has reduced its debt by more than €560m since June 2007, Donovan said on the call.
The company had revenues of €1.83bn in the 12 months to June, 8.5pc lower than the previous year, according to the results.
Net cash flow was 25.3pc lower than in the year to June 2009 and operating costs were 11.2pc lower as the phone operator cut 582 staff.
The company said it faces €342m of debt payments over the next three years, including €101m coming due before June 2011.
Chief Financial Officer Peter Cross said on the conference call he’s confident Eircom will be able to avoid a default, and that the company is considering options including raising equity from shareholders and renegotiating debt covenants with lenders.
Standard & Poor’s said in a July report that Eircom may breach conditions on its loans in 2011. The company also has bonds and floating-rate notes.