Business Irish

Tuesday 12 December 2017

Eircom offers main lenders 20pc stake in the company plus €300m

telecoms

Donal O'Donovan

Donal O'Donovan

EIRCOM'S owners are offering 20pc of the company to its biggest lenders, according to sources close to the situation. The deal includes around €300m in cash payments and will allow shareholders to keep control of the company.

The top-ranked lenders are owed €2.36bn and are considering the offer, but they see it as the first move in what is set to be a long process. Other lenders, who are owed €1.3bn, will lose everything under the plan.

This is the first time that a substantial restructuring proposal has been made, more than a year after moves to tackle the company's unsustainable €3.7bn of debt got under way.

Specialist newswire Capital Structure says the proposal has been backed by both Singapore-based STT -- which owns two-thirds of Eircom -- and the employee shareholder trust that owns the rest. If it succeeds, the current shareholders will keep a majority stake.

Shareholder trust

A spokeswoman for STT and representatives of the employee shareholder trust declined to comment.

The Irish Independent understands that the proposal has been put to a six-member co-ordinating committee representing the top-ranked lenders. That committee wants to flush out and then weigh up alternative offers, before canvassing opinion from the full group of lenders.

The top-ranked lenders are a mix of over 200 global investment funds and banks, making co-ordination crucial to a smooth negotiating process.

The current proposal asks senior lenders to accept a 20pc stake in the company in exchange for writing off just 8pc of what they are owed.

In addition, the company will write a cheque for €300m, which will be used to repay around 11pc of the top-ranked loans early. Eighty per cent of the €2.36bn will then be reinstated as new debt, due for repayment later than the current 2013-2014 maturity dates.

The deal would slash nearly €1.5bn off Eircom's debt. Shareholders are hoping that it will put the company back on a sound financial footing.

The proposal is a sign that the Eircom talks are heating up. It comes just days after new independent directors were appointed to the board to help move along its long-expected debt restructuring.

Even if a deal is hammered out, execution could be fraught. Any restructuring that leaves some lenders empty-handed is sure to be opposed and will ultimately have to be forced through in the courts.

Irish Independent

Promoted Links

Business Newsletter

Read the leading stories from the world of Business.

Promoted Links

Also in Business