Sunday 20 October 2019

Eircom offered €1.4bn on markets

Donal O'Donovan

Donal O'Donovan

INVESTORS have offered to lend Eircom €1.4bn in its return to the bond markets, less than a year after the company burned bondholders with a 40pc debt write-off.

Eircom had sought to borrow €310m on the markets in a planned refinancing. The bond size was increased to €350m following strong investor demand.

That late surge in demand helped drive the interest rate on the new debt down to 9.25pc from an expected rate of 9.5pc.

The deal was four times oversubscribed at €1.4bn of orders, though the deal size was ultimately increased by "just" €40m. The bulk of proceeds will be used to redeem a share of Eircom's outstanding senior loans at 92 cent in the euro.

Even with strong demand, the interest is more than double what Eircom pays on the €2.36bn of senior loans.

The cash raised ultimately goes to Eircom shareholders – a group of lenders who took ownership of the company last year after the then-over- indebted business was forced into examinership.

The new bonds will fall due in 2020, three years later than the bulk of Eircom's debt pile.

If Eircom is sold in the coming three years, the company will have to pay a 1pc bonus on top of having to buy back the bonds.

Irish Independent

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