Eircom owner STT insists on 'euro exit' €200m payback clause
EIRCOM'S owners are so worried about a euro break-up that they want a €200m cash-back guarantee before agreeing to put new money into the business, the Irish Independent has learned.
Eircom's Singapore-based owner is refusing to finance a rescue of the company until it gets a guarantee from lenders that will enable it to recover cash if Ireland is forced out of the euro before the end of 2013, three sources told the Irish Independent last night.
Singapore Technologies Telemedia (STT) yesterday submitted a proposal to lead a restructuring of Eircom's €3.7bn of debt. The offer was made more than a week after an extended deadline for proposals to be submitted closed.
STT faces losing control of Eircom as the company has breached the terms on its debt.
The Singaporean investor risks being left with nothing under two alternative restructuring proposals already put forward by Eircom lenders.
STT is proposing to invest €200m in Eircom, in exchange for being allowed to keep 75pc of shares. An employee ESOT is in discussions to join the bid.
The cash would go in two separate instalments, the Irish Independent has learned.
Crucially, the STT offer includes a surprise clause that would break the restructuring contract if Ireland exits the euro. STT inserted a material adverse change (MAC) into yesterday's restructuring proposal, sources said.
Under the surprise clause STT will not have to pay the second €100m instalment of rescue cash if Ireland is forced to leave the euro before the end of 2013, and cash already invested would be protected.
Lenders were told of the new STT offer just hours before they held a meeting with Eircom's managers in London.
STT refused to comment on the details of the offer.
Eircom's top lenders would be handed 25pc of Eircom under the STT plan, in exchange for suffering a partial loss in the €2.4bn they are owed. All other lenders would be left empty-handed.