Friday 15 December 2017

Executives at Eir set for €181m windfall after IPO

Eir planned a return to the stock market in 2014
Eir planned a return to the stock market in 2014
John Mulligan

John Mulligan

Senior executives and managers at former semi-state telco Eir are set to split a €181.6m windfall when the company refloats on the stock market or is sold, according to figures seen by the Irish Independent.

Separate accounts also just filed for Eircom Holding SA - Eir's holding company - revealed that an equity value of €1.29bn has been placed on the business.

Newly-filed accounts for a Luxembourg-based company connected to the telco showed that the fair value of Eir shares held for a management incentive plan was just under €182m at the end of last June.

A big chunk of that money would be payable to ceo Richard Moat. He is overseeing a €1.2bn investment in Eir's network as the company sees itself morphing from a pure telco to a media firm.

Eir planned a return to the stock market in 2014.

It was speculated at the time that Mr Moat, then chief financial officer, and former ceo Herb Hribar, would be in line to make up to a total of €60m in bonuses as a result of the flotation.

The flotation was pulled, but it remains the most likely exit strategy for Eir's private equity shareholders.

The €1.29bn valuation is the company's own estimate. Eir had previously guided the enterprise value of the firm, which includes debt and equity, but not given a definitive equity valuation for the business.

The enterprise value of the telecoms company was put at €3.5bn earlier this year after Singapore sovereign wealth fund GIC took a 16pc stake in Eir, investing €230m in the business.

Eir executives have already benefited from a liquidity event that took place in June 2015.

That saw the Luxembourg company that holds the shares on behalf of Eir executives buy €56.2m worth of a specific class of shares in return for either another class of shares in Eircom Holding SA, and/or cash, depending on each shareholders' decision.

The horizon for Eir's stock market return is drawing closer, but Mr Moat told the Irish Independent last April that such a move was still probably at least two years away.

In October, one of Eir's then biggest shareholders, US hedge fund York Capital, sold its almost 10pc stake in the telco. That resulted in Eir's biggest shareholder, Anchorage Capital, gaining sole voting control at the former state-owned firm as it bought some of York Capital's shares.

Eir has been benefiting from its increased network investment and a recovering economy.

In its last financial year, for the 12 months to the end of June 2016, it reported revenue of €1.3bn. That was a 4pc increase on the previous year. Its earnings before interest, tax, depreciation and amortisation (EBITDA) were 5pc higher at €505m.

It was the first time in eight years that Eir recorded an annual increase in its turnover.

In 2012, Eir entered what was Ireland's biggest ever examinership.

It was crippled with €4bn of debt. It exited the process the same year, slashing its debt and handing control to lenders.

In June, Eir issued a €500m bond, helping it to retire more expensive debt and saving it €17m a year in interest. Later that month it issued an additional €200m of bonds.

In October, Eir got agreement from lenders to cut the interest rate on €1.6bn of debt to 4pc from 4.5pc, saving it over €8m a year in interest payments.

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