EIRCOM is planning to raise €310m on the bond market in its first financing deal since the company emerged from examinership last June.
The company under chief executive Herb Hribar has hired investment banks Goldman Sachs and JPMorgan to arrange a planned issue of new high-yield bonds.
The planned tranche of senior secured notes will be due to be repaid in 2020, three years later than the company's existing loans.
Proceeds of the bond deal will be used to repay part of Eircom's current debt of €2.3bn. Lenders are currently earning interest of 4pc over euribor on Eircom loans – with the 4pc made up of 3pc in annual cash payments and 1pc in rolled up interest.
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.
Bondholders suffered the bulk of loses when Eircom walked away from €1.8bn of debt under its examinership. In contrast, the holders of better secured loans suffered a 15pc loss under the deal.
Ownership of the company was stripped from Singapore-based STT and an employee share scheme and handed to secured lenders.
Analysts said the proposed bond deal is a sign of the liquidity surging through the bond markets as of any turnaround at Eircom itself.
Goldman Sachs and JP Morgan will launch an investor roadshow to market the new bonds over the next week.
The new bond deal is expected to close within the next fortnight.
Rating agency Standard & Poor's cut its outlook on Eircom this week to negative, saying it faces challenges generating cash in the next two years as it invests in its network.
However, the agency affirmed its B rating on the company.
Financial accounts filed by Eircom this month show that revenue declined 10.7pc in the last financial year to €1.51bn.
Adjusted earnings before interest, depreciation, taxation and amortisation (EBITDA) at its mobile unit – which includes Meteor – slumped 85pc to €9m. Revenue at the mobile arm fell 9pc to €372m.