Rabbitte 'confident' for Eircom's shareholders after meetings
Communications Minister Pat Rabbitte has said he is confident that Eircom's shareholders will be able to resolve the company's position with bondholders as it faces breaching covenants on its massive debt pile.
Mr Rabbitte said yesterday that, since taking over his portfolio in March, he has met management from Eircom, which is headed by Paul Donovan, and principals of Singapore Technologies Telemedia, which controls the telco.
Eircom's employee share ownership trust (ESOT) controls a minority holding.
"I've met the principals in the company and the role of Eircom within the telecommunications infrastructure remains critically important," said Mr Rabbitte.
"I'm satisfied as a result of the discussions I've had that it is the intention of the company to surmount the difficulties that they have. Both shareholders are determined to make it work and that is certainly the clear signal that they have sent."
Eircom is saddled with €3.7bn in debt and faces a covenant breach within a matter of weeks. It must remedy its financial position to avoid that breach, or reach an alternative agreement with bondholders.
While a cash injection of roughly €40m from STT and the ESOT could result in the avoidance of the upcoming breach, a mooted scenario is that the pair will stump up an additional €300m in equity in return for bondholders taking up to an €800m haircut on their debts.
Eircom staff recently agreed to radical restructuring including 1,000 layoffs that is aiming to generate €92m in savings by 2013.
Meanwhile, mobile operator 3 Ireland is to offer its data customers super-fast download speeds after it awarded a €38m contract to BT to roll out fibre to its masts.
The mobile company said yesterday that the multi-million euro investment will see BT's fibre network integrated with 200 new mobile mast sites, while BT will also support an additional 1,000 mobile sites owned by 3. The fibre roll-out is expected to take place over the next 18 months.