Wednesday 11 December 2019

Eircom pulls plug on its €3bn stock market flotation

Eircom: IPO cancelled
Eircom: IPO cancelled
John Mulligan

John Mulligan

Eircom has pulled the plug on a planned €3bn stock market listing just a week after filing an updated flotation prospectus with the Central Bank.

The decision marks the end - for now at least - of a move that would have seen the telecom firm's shares sold on the stock market for the third time in 15 years.

It's believed Eircom's shareholders couldn't convince potential investors that the business is worth as much as they think it is.

Eircom's biggest shareholder is US private equity giant Blackstone, which owns about 25pc of the business. It and other lenders gained control of Eircom in 2012 following what was Ireland's biggest ever examinership.

But it's likely Eircom will revisit stock market plans some time within the next two years, hoping that an improvement in its own business will justify a higher valuation on the company.

Cancelling the flotation also means that senior Eircom executives, including CEO Herb Hribar, will now miss out on tens of millions in bonuses that were slated to be paid in the event of a flotation.

It's understood that no alternative bonus structure has been initiated to replace the incentives that were contingent on the initial public offering (IPO) going ahead.

It had been expected that Eircom could have raised as much as €1bn from the flotation. The proceeds were earmarked to pay down its €2.3bn debt.

In a statement, Eircom said that there are "encouraging signs of positive momentum" in its business.

"Our primary focus over the coming months will be to accelerate this momentum, to continue to improve our financial performance and to realise the benefits of our significant investment programme which will deliver value to all our stakeholders," it added.

"Therefore, the company has concluded this strategic review and does not intend to proceed with an IPO at this time."

Eircom began its strategic review in April.

Apart from possibly floating the business, management and investors had also considered selling Eircom to either a trade buyer or other private equity interests.

Eircom received permission last month to transfer its corporate debt to a new Jersey entity. No decision has yet been taken on when or if that transfer might happen.

Irish Independent

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