Sunday 17 December 2017

Eircom staff to share in final windfall of €40m

John Mulligan

John Mulligan

THOUSANDS of current and former Eircom staff will soon be unwrapping their share of a €40m Christmas windfall.

A trust set up for the workers 14 years ago when its predecessor, Telecom Eireann, was about to hit the stock market is preparing to divvy up its final payment among the more than 14,000 former and current employees.

The final distribution to the members will bring their total bonanza since 1998 to €900m, and it's all been tax-free.

The final payment due in the post this December comes on top of an average €8,000 each they received from the trust during the summer, when €85m was divided among them.

The trust acquired nearly 15pc of Eircom in 1998 on behalf of employees before the company, then Telecom Eireann, floated on the stock exchange in 1999. It acquired most of the stake using €127m in funding from Eircom and a €121m loan from a Swiss bank. At one stage, the trust owned nearly 30pc of Eircom.

On average, each member of the trust has received up to €70,000 each tax-free since it was set up, depending on when they joined.

Although the stock market flotation of Telecom Eireann was deemed an all-round disaster – with hundreds of thousands of investors nursing heavy losses – members of the trust made a killing as a result of subsidiary Eircell being acquired by Vodafone and two subsequent takeovers of the company.

The trust – which is set to be wound up by next March – is set to begin distributing tens of millions of euro worth of Vodafone shares or proceeds from their sale to the 14,000-plus members within the next two weeks.

The trust had retained control of about €40m worth of Vodafone shares that it received when Eircom sold its Eircell mobile business to Vodafone in 2001 for €4.2bn.

The trust is currently waiting on remaining members to submit so-called forms of direction and to decide whether they want to get a Vodafone share certificate or sell the stock. Some have probably opted to have their shares delivered to a pooled account where they can decide later what to do. The members only have until next week to return the forms or else they'll automatically be sent out Vodafone share certificates.

As of earlier this month, more than 12,000 members of the trust had returned those forms.

Members will begin receiving their cash or shares from the start of December, just in time for Christmas.

In agreement with the Revenue Commissioners, it had originally been decided that the trust would be wound up in 2014.

But debt-ridden Eircom entered examinership in March this year after lenders agreed to allow it time to restructure its finances. That examinership – the largest ever in Ireland's history – saw Eircom reduce its debts from €4bn to €2.35bn.

Its senior lenders took complete control of the company under the terms of the deal.

Irish Independent

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