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Eircom in bid to ease creditors' fears

Financial advisers to Eircom have held informal briefings with some of the creditors owed €4.2bn by the company.

The talks followed the departure of finance director Peter Cross late last month. Discussions were held to reassure creditors that plans to tackle the telco's debt were progressing, a source said. Only a minority of creditors are believed to have been contacted so far. A spokesman for Eircom said the company had no comment to make on the issue.

The contact with creditors is understood to have been initiated after some of them became frustrated by the slow pace of progress on the case, and worried that Mr Cross's resignation would set the timeline to restructure the debt back further.

Finance director Mr Cross was the main point of contact between the company and its creditors before he stepped down at the end of last year.

Some lenders hope Eircom's Singaporean parent STT will inject cash into the business to help the company comply with the terms of its bank loans, which are due to be tested in March.

A source who took part in some of the informal discussions said STT was unlikely to invest fresh cash without a wider restructuring that included asking lenders to write off some of what they were owed.

The price being paid in the market for Eircom's senior bonds has dropped from 50pc of face value before Christmas to a little over 40pc this week.

One lender to the company said the bonds were falling on the continuing uncertainty around the company's plans and on fears the Irish economy could deteriorate further. More junior bonds rarely trade and are valued at around 10 cent in the euro.

Irish Independent