Eircom has set aside €29m to cover management bonuses as it prepares to push the button on a €3bn stock market flotation. Chief executive Herb Hribar and his number two Richard Moat are part of an incentive scheme that may pay out millions when the company floats.
"The group has recognised a charge of €29m in its income statement for the year ended June 30, 2014 in relation to its obligations in respect of the management incentive plan introduced in the year ended June 30, 2013," according to a document sent out to bondholders.
Eircom also set aside €6m for a "management incentive plan" in 2013, according to the documents.
"The group has recognised a charge of €20m in its income statement for the year ended 30 June 2014 in respect of its obligations in connection with potential debt value events. Separately, the group has also recognised a charge of €9 million with a corresponding increase in equity, in respect of contractual rights under the MIP awarded by the parent company, Eircom Holdco to the group's employees, for which the group has no obligation to make any payment," the documents noted. An Eircom spokesman said he was unsure what, if any, clarity could be provided.
Last Friday, Eircom moved its return to the stock markets a step closer when it filed a prospectus with authorities. The company is likely to raise €1bn as it aims to cut its debt mountain. US telecoms firm AT&T and private equity groups including KKR, CVC and Apax are thought to been approached to buy the telco before the IPO route was selected.
Eircom, which has slashed staff numbers under boss Herb Hribar, is controlled by US private equity groups and hedge funds. Blackstone owns a 25pc stake, with Anchorage capital about 8pc and Credit Suisse Group around 6.3pc.
It will be the third time in 15 years that Eircom will have floated. Since being sold by the state in 1999, Eircom has been owned by a series of private equity groups, which have stripped back costs and loaded it up with debt before flipping it to new owners.
Sunday Indo Business