Eircom to exit examinership with 40pc less debt and new owners
EIRCOM will exit examinership on June 11 with a radically reduced debt burden and new owners, the Commercial Court ruled yesterday.
The decision marks the end of the biggest corporate bankruptcy in the history of the State.
The agreement sees about 1,000 jobs disappearing through voluntary redundancies over the coming years while a further 5,000 jobs will be saved.
The exit next month brings to an end two years of negotiations between Eircom, its lenders and shareholders after management were forced to confront the reality that its debt pile had become unsustainable.
Those talks involved six law firms, five Wall Street investment banks and three of the five biggest global accountancy practices.
The bill for advisers is likely to run to tens of millions of euro, examiner Michael McAteer said last night.
However, he said the €4bn of debt involved justified that level of spend, noting that access to the firms radically speeded up the examinership process. In the end, the examinership ended without the anticipated fireworks yesterday, when none of a group of bondholders facing a complete loss of €350m they lent to Eircom objected to plans to cancel their debt.
Instead, there was no objection when lawyers for examiner Michael McAteer presented a scheme to wipe out 40pc of Eircom's €4bn of debt, and hand the company's shares to a group of secured lenders.
Mr Justice Peter Kelly approved the plan following a hearing lasting a little over an hour and a half.
The judge backed the plan, and said it would benefit Eircom, its creditors, employees and the State.
He commended the examiner for steering the large, complex deal through examinership in less than the time allotted.
Yesterday's confirmation hearing was held on the 53rd day of the examinership, a process than can run to 100 days.
"That ought to be a model for other examiners to follow," the judge said, adding that he had no hesitation in awarding him his costs.
Judge Kelly said he was satisfied to approve a business plan and restructuring proposals aimed at reducing Eircom's crippling indebtedness to €2.35bn,
He said a deal to rescue Eircom from a threatened financial collapse was a benefit to the State because of the strategic importance of the telecoms company.