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Eircom seeking to boost finances with loan extension bid

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Eircom group headquarters in Dublin

Eircom group headquarters in Dublin

Eircom group headquarters in Dublin

EIRCOM is seeking permission from its lenders to reschedule €2bn worth of loans. It is the second time in just over two years that Eircom has gone cap in hand to lenders since the biggest corporate insolvency in Irish history.

The phone company is trying to ensure its finances are in better shape for a future sale, flotation or bond market refinancing. It wants to extend over €2bn worth of debt rather than return to the bond market, chief executive Richard Moat said.

It has the support of its largest lenders to extend the debt by two years to September 2019, Mr Moat said, though the proposal still needs unanimous support from creditors. Lenders have until February 28 to give their consent.

More than 200 banks and investment funds hold Eircom debt. US investor Blackstone holds the largest single stake.

Last year, the lenders backed a scheme that wiped out 40pc of Eircom's debts and saw the shareholdings of former owners STT of Singapore and an employee share trust wiped out.

"What we're attempting to do is a holistic refinancing of €2bn of debt in one go, which makes it less likely that we'd return to bond markets in the near future," said Mr Moat. Eircom is also seeking to amend the interest rate of the loan.

The cost of opting to refinance with a bond, he said, "would be substantially higher".

The company also wants approval to pay dividends after a possible flotation.

AMBITIOUS

The plans emerged as the group released its latest batch of half-year results, which showed sales for the quarter and six months ending December 31 were €344m and €657m, down 5pc and 7pc respectively on the same periods the year before.

Its ambitious cost-cutting programme, the results showed, continued unabated.

Operating costs fell by 10pc to €424m. Some 1,679 employees have left the group during the past 12 months and a further 260 will leave the business by the end of December 2014.

"We remain on track to achieve €100m in operational cost savings on an annualised basis by the fourth quarter of this financial year," said Mr Moat.

Eircom said the recent storms have already cost the firm over €2m in network repairs and equipment replacement and this could rise further with more storms forecasted this weekend. The operator has had to revise its operating expenditure costs upwards for the first part of 2014 partly because of the bad storms and partly because of higher energy costs.

"Both broadband and telephone services are impacted (by the storms)," said a spokesman for Eircom.

"The damage caused by the latest round of storms is mostly wind related and has resulted in significant damage to our overhead network particularly with falling trees taking down overhead telephone lines."

Irish Independent