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Eircom lenders expected to take control
05 December 2011
Singapore investor declines support to Ireland’s Eircom as creditors wait for interest payments
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Eircom
Singapore
ST Telemedia
Singapore Technologies Telemedia
Eircom’s independent directors are to meet to review options after the majority shareholder, the Singapore government investment arm Singapore Technologies Telemedia, said it would not take part in a restructuring of the company.
ST Telemedia has decided not to meet the extended deadline for a proposal to restructure Eircom’s €3.7bn debt. The company owns about two thirds of Eircom, with the rest in the hands of an employee trust.
Eircom said it was looking at proposals from the First Lien Co-ordinating Committee on behalf of a group of first lien senior lenders, and a group of the second lien senior lenders, respectively.
Paul Donovan, a former Vodafone executive who has been CEO of Eircom since July 2009, said: “While the current shareholders have not yet submitted a proposal, the independent directors and management will continue to encourage both shareholders to do so. However, the immediate priority is to ensure that practical progress with regard to the balance sheet remediation process takes place, working with the support of the FLCC.”
ST Telemedia said: “Owing to the continuing macro-economic uncertainty in the eurozone, ST Telemedia has not submitted a proposal. We continue to monitor and evaluate our investment position, and remain in discussion with the company and the FLCC.”
If no agreement can be reached it seems likely that Eircom will be taken over by its lenders to which it owes around €2.4 billion. Eircom’s directors have sought an extension until January 31 from the lenders.
Eircom expected ST Telemedia to propose a deadline extension offer to retain their control over the operator. ST Telemedia and the minority shareholder, the Employee Share Ownership Trust, were expected to invest €300 million and offer 2% of the equity to first-lien lenders, according to the Irish Times. ST Telemedia has signalled it may return later, and Eircom’s directors continue to expect a proposal from the investment operation.
ST Telemedia took control of Eircom in mid-2009. It was the controlling shareholder of Global Crossing and is now the biggest shareholder in Level 3 since that company bought Global Crossing this year. GTB
Further reading from Global Telecoms Business:
Digicel 'no longer interested' in Eircom 17 Nov 2011
Eircom offers 20% stake to lenders 10 Oct 2011
Eircom plans to invest €100 million in fibre 01 Aug 2011
Eircom shareholders back €140m STT bid 17 Dec 2009
Global Crossing owner poised over Eircom 10 Aug 2009