G'Day eircomaroo says the Aussies - B&B approach eircom

damien

http://www.bloomberg.com/apps/news?pid=10000102&sid=awzdl2p5ySEE&refer=uk

Eircom Receives Approach From Australia's Babcock & Brown

Feb. 21 (Bloomberg) -- Eircom Group Plc, Ireland's biggest telephone company, received a preliminary approach from Babcock & Brown Capital Ltd., an Australian investment bank.

No financial details were provided in a statement from Eircom today. Eircom has a market value of 2.35 billion euros ($2.8 billion).

The approach for Eircom comes two months after a failed takeover attempt by Swisscom AG, Switzerland's largest phone company. Eircom controls 79 percent of Ireland's fixed-line phone market and offers an opportunity to access the country's mobile- phone market, where consumers spend about 50 percent more on calls than in the U.K., Germany and Italy.

Eircom shares, which have gained since the company returned to the stock market in March 2004 after a three-year absence, rose as much as 14 cents, or 6.5 percent, to 2.30 euros and traded at 2.22 euros at 2:45 p.m. in Dublin.

Eircom employees own 21 percent of the stock through Eircom ESOP Trustee Ltd., the company's largest shareholder. Babcock & Brown acquired a 12.5 percent stake in Eircom in October, calling the investment a ``strategic shareholding.''

European Takeovers

Europe's phone market has seen a wave of takeovers in the past year, including Telefonica SA's 17.7 billion-pound ($31 billion) purchase of the U.K.'s O2 Plc and the leveraged buyout of Denmark's TDC A/S.

Swisscom ended talks to buy the Irish company in December after the Swiss government, which owns 66 percent of Swisscom, banned the company from making foreign acquisitions.

Since then, newspapers including the Irish Times have said Babcock & Brown and Smart Telecom Plc were potential bidders for Eircom.

Eircom's net income in the three months through September rose 6.9 percent to 31 million euros from a year earlier, the company said in November. Sales climbed 1 percent to 403 million euros.

The Irish company, which sold its mobile-phone business to Vodafone Group Plc in 2001, last year returned to the wireless market by agreeing to buy Ireland's Meteor in an effort to make up for a drop in revenue from traditional phone services.

``We look to mobile to bring growth back to the company,'' Eircom Chief Executive Philip Nolan said in November.

Mr_Man

Now that Eircom has acquired a potentially lucrative mobile arm it looks as if the Vulture capitalists are gathering to pick over the remains. It would seem that B&B have little or no experience running a telco so it looks as if things are unlikely to improve if they take over.

All in all I can see little upside for the Irish telecoms user in this move. The only people who will benefit are Dr Phil and his crew - the words fat cats comes to mind, wonder why?

M.

Mr_Man

I was mistaken above when I talked about the only beneficiaries being Dr Phil and his crew. I forgot those pillars of unionism who have condemmed the country to a third rate service - take a bow the CWU


M.

netwhizkid

Pity Swisscom didn't buy it as at least they have experience being a Telco themselves. Please stand up Mary O'Rourke and take a bow, Oh yeah your new job is to download 15GB of Mp3's on a 14.4kbps line costing 5¢ per Minute, Oh yeah you must achieve this in under 12hrs while making several lengthy phone calls to "legal experts" to determine if it is okay to Download the Mp3s.

The rules, No ISDN, Most certainly no broadband, Your Computer must be infected with spyware and adware, and have occasional back door visits from Bubbles.

How would she like it? I wonder, Visions of the Impatient German Child come to mind.

I would love to subject old Mary to that for one day, It would be the ultimate pay back for the last 4yrs suffering without broadband. We have a Blood-Pressure Monitor here (my dad uses it as he has hypertension) I once took my pressure for the craic while downloading a 20Meg file on a 40Kbps connection. It was almost twice above normal :mad:

Broadband could save lives too.

IT Loser

Mr_Man wrote:

I was mistaken above when I talked about the only beneficiaries being Dr Phil and his crew. I forgot those pillars of unionism who have condemmed the country to a third rate service - take a bow the CWU


M.

Henry Ford had the right idea.....treat the workers fair, butcher the Unions.

As for B&B if they take over they are likely to retain the core units of Eircoms nerve centre, which means more of the same old ****e.

Thank God I'm with BT

1huge1

netwhizkid wrote:

Pity Swisscom didn't buy it as at least they have experience being a Telco themselves. Please stand up Mary O'Rourke and take a bow, Oh yeah your new job is to download 15GB of Mp3's on a 14.4kbps line costing 5¢ per Minute, Oh yeah you must achieve this in under 12hrs while making several lengthy phone calls to "legal experts" to determine if it is okay to Download the Mp3s.

The rules, No ISDN, Most certainly no broadband, Your Computer must be infected with spyware and adware, and have occasional back door visits from Bubbles.

How would she like it? I wonder, Visions of the Impatient German Child come to mind.

I would love to subject old Mary to that for one day, It would be the ultimate pay back for the last 4yrs suffering without broadband. We have a Blood-Pressure Monitor here (my dad uses it as he has hypertension) I once took my pressure for the craic while downloading a 20Meg file on a 40Kbps connection. It was almost twice above normal :mad:

Broadband could save lives too.

i have isdn and it really isnt that much better than dial up
though having two phone lines is handy
as for that german kid he has serious problems

watty

1huge1 wrote:

i have isdn and it really isnt that much better than dial up
though having two phone lines is handy
as for that german kid he has serious problems

Perhaps you are using a Serial port adaptor rather than a PCI card or Ethernet /ISDN Router.

I find that 64K ISDN in all tests in school classrooms and offices I installed it is about 2 to 3 times faster than dialup for one channel. Even at 44k a lot of packets are lost and resent. 64K ISDN is about equivalent to a hypothetical 80k to 100k dialup in performance. Also traditionally it was easy to get 1:1 contention instead of the high contention on many exchanges with dialup.

Also almost instant connect gives "always on" illusion till you get the bill

kaizersoze

Babcock and Brown ups Eircom stake

February 24, 2006 14:38
Australian finance house Babcock and Brown has increased its stake in Eircom to 21% after spending around €70m on Eircom shares in the last few days.

On Tuesday Eircom received a preliminary takeover approach from Babcock and Brown. The potential bid is thought to be worth around €2.4 billion.

Last year Swisscom had to call off its attempt to takeover Eircom after the Swiss Government blocked the approach.

http://www.rte.ie/business/2006/0224/eircom.html

zuma

The Australian DSL scene is as bad as ours...if not substantially worse(is that possible?) in some cases!!!

If they take control then I think were all fooked!!!!

kaizersoze

Their stake had increased to 22% by the end of the day. Equaling the employee shareholding.

Blaster99

Can somebody briefly explain to me how it is that when a company is bought, that it is then used to finance the purchase of itself? I'm referring to the likely significant increase in eircom debt as a result of this purchase.

Also, why is it that it is seen as likely that B&B will split up eircom into retail and wholesale? That sounds like something a regulator would ask for, and I didn't think anyone really cared what ComReg thinks or says.

SkepticOne

Blaster99 wrote:

Can somebody briefly explain to me how it is that when a company is bought, that it is then used to finance the purchase of itself? I'm referring to the likely significant increase in eircom debt as a result of this purchase.

The company issues bonds to raise money to buy out the remaining shareholders. The existing shareholders are happy because they have been bought out at a good price.

kaizersoze

Blaster99 wrote:

Can somebody briefly explain to me how it is that when a company is bought, that it is then used to finance the purchase of itself? I'm referring to the likely significant increase in eircom debt as a result of this purchase.

The prospective purchasers (B&B) buy enough shares to gain a controlling influence on the board. Then the board borrow the remaining money needed to buy out the remaining share holders.

Also, why is it that it is seen as likely that B&B will split up eircom into retail and wholesale? That sounds like something a regulator would ask for, and I didn't think anyone really cared what ComReg thinks or says.

Splitting Eircom up should happen and ordinarily it would be a good thing. Splitting it into 4 (retail, wholesale, network & mobile) would probably be best. The problem in that B&B have no history in running a telco as they are purely venture capitalists with the aim of making as much money from the deal as quickly as possible. If they did split it up, they would most likely sell of each part to the highest bidder.

Cryos

kaizersoze wrote:

The prospective purchasers (B&B) buy enough shares to gain a controlling influence on the board. Then the board borrow the remaining money needed to buy out the remaining share holders.

Splitting Eircom up should happen and ordinarily it would be a good thing. Splitting it into 4 (retail, wholesale, network & mobile) would probably be best. The problem in that B&B have no history in running a telco as they are purely venture capitalists with the aim of making as much money from the deal as quickly as possible. If they did split it up, they would most likely sell of each part to the highest bidder.

If B&B decided that they didnt want the mobile wing of eircom (meteor) they could sell it to say someone like smart ? theres alot of ways this can go down but it has the possibility of being a very good move.

watty

The only logical reason for B&B to buy it is to asset strip. How I don't know, but they seem unlikely people to have the sort of enthusism that Digiweb or Smart etc have in running a Telcom outfit.

Even National Troll Roads's ImaginaryBB would have more gumption for running Eircom.

Sponge Bob

B&B have a complex and highly leveraged plan to disaggregate eircom into chunks that they would see as more valuable than the whole. At the end of the scam they will walk out with some €400-600m profit in two years and will leave the hulk owing c.€3Bn not €2.2Bn as it does now.

I am not clear whether they want 100% or 80% or 76% (they have different implications ) but I suspect its 100%. Therefore they must deal with Biddy.

Biddys esop thing has 6.2K working eircom staff member and over 7k not working staff members . The ex eircom staff are more important within the esop than the working ones. It is at this stage uncertain that B&B will be allowed to create a vehicle such as Valentia, with Biddy on board, that will get 100% control . Nevertheless the negotiations are ongoing with Con and if Con likes the size and colour of his trough it will happen .

An asymettrical voting right arrangement / shareholding arrangement / dividend arrangement could be the likely outcome.

watty

Sponge Bob wrote:

B&B have a complex and highly leveraged plan to disaggregate eircom into chunks that they would see as more valuable than the whole. At the end of the scam they will walk out with some €400-600m profit in two years and will leave the hulk owing c.€3Bn not €2.2Bn as it does now. .

Is that FinanceBabble for Asset Strip?

Sponge Bob

watty wrote:

Is that FinanceBabble for Asset Strip?

In pure Sponge-ese I will say that Eircom will be a lot more ****ed after B&B buy them than they are now. Now they are simply ****ed, soon they will be comprehensively and irretrievably permanently ****ed.

HTH Watty

netwhizkid

Sponge Bob wrote:

In pure Sponge-ese I will say that Eircom will be a lot more ****ed after B&B buy them than they are now. Now they are simply ****ed, soon they will be comprehensively and irretrievably permanently ****ed.

HTH Watty

Looking at it now, Babcock and Brown will destroy Eircom and sell them off soon enough to more Vulture Capitalists, I hope they Bankrupt and start leaving people without phones, then the Government would be left with no alternative but to Nationalise Eircom, then bringing us full circle hopefully investing Billions on a FTTH service, then a soon as the PDs get back into Government they'd strip the whole thing down to the wire and flog it onto the Stock Market and screw the people once again. The Pds & Fianna Fail are the whole cause of this mess in the first place. Noel O'Flynn regretted in to days Sunday Business Post that they had sold the Network. Well done Noel, It took your hum.... 7yrs to figure it out. This coming from a ticko who had the neck to confront Striking An Post Staff in Killarney last Year during the Fianna Failure Ard dHeis. :mad: This government will soon have the country on its knees and if yesterdays scenes were anything to go by, I'd say we are not too far away from another Civil War.

watty

Was that what the riot in Dublin was about?

Sunday Indo or something seemed to suggest that B&B was buying shares for some other unidentified outfit.

bealtine

Sponge Bob wrote:

In pure Sponge-ese I will say that Eircom will be a lot more ****ed after B&B buy them than they are now. Now they are simply ****ed, soon they will be comprehensively and irretrievably permanently ****ed.

HTH Watty

After all the "venture capitalists" have finished with our telco it will have a debt of over 3.5 billion on its books. That is hardly inspiring when massive investment is needed in the crumbling infrastructure...
It is unlikely the promised 200 million investment in infrastructure will materialise as any spare cash wil be going to service the massive debt.

B&B see this purely as a capital extraction mechanism, nothing more nothing less. There is no mention anywhere (so far) of how B&B will endevour to improve the telecomms landscape or their plans for running a telco.

I'd say after this escapade eircom will be so useless that the gov will have to step in and rescue it. Otherwise we'll have a third world infrastructure for ever more.

The glories of private monopolies...

jwt

AFAIK a large percentage of the 2bn debt is to the government.

Any asset stripping could be stopped by the Gov. asking for a significant percentage of the cash profits being used to service the debt.

Also in Ireland it's a pretty serious charge to wilfully run a company into the ground leaving massive debts, reckless trading for one has prison time attached.

But and it's a very big but, it does require the creditor to persue the debt, and for any creditors to formally lodge a complaint/civil action.

Always wondered what would happen if the Gov. issued a notice to wind up the company pending repayment of debts??????


John

netwhizkid

jwt wrote:

Also in Ireland it's a pretty serious charge to wilfully run a company into the ground leaving massive debts, reckless trading for one has prison time attached.

Excellent, Most of the Fianna Fail/Pds Tds and their Appointed will be locked away soon. If their is such laws as they are basically trying to run every public service into the ground as an excuse for Privatisation. Then again they will probably change that to protect themselves. Eircom should be Nationalised and use Public money to bring about a world class network and allow equal and fair competition, and have Eircom back as a Semi-State with PPP (Public Private Partnership) We could in this little country of ours have an excellent Telecommunications network within one-year if the critical decisions were taken today. Like to hell with the few Billion it would cost, €2billion according to the Chambers of Commerce. It would enable thousands of new small Businesses to start and enable existing business to become a lot more efficient. After all we are living in a Highly Globalised Economy and if the Infrastructure isn't provided then Mega Corp Global can easily pull up sticks and relocate to where there is good Infrastructure as NEC did in Co. Meath last Week. Whatever it would cost would easily be recouped through, tax on new businesses, massive savings as more people could work at home, and most Importantly the Social Benefits of a FTTH service would be immense. This is what I would love to see happening but sadly none of this become a Reality because of the Progressive Democrats "the champion of Business" They would rather sell Ireland down the swanny hole and go back to the bad old days rather than using State-Intervention to give Ireland the best Broadband Infrastructure on Earth.

Here's looking forward to Eircom Bankruptcy and Forced Nationalisation and a a change of Government Then things will be achieved.

damien

There's a politics forum, go there and complain about the PDs. You were already asked to tone down your political rhetoric here.

netwhizkid

damien.m wrote:

There's a politics forum, go there and complain about the PDs. You were already asked to tone down your political rhetoric here.

Okay, sure. But lets not fight we are all in the same boat here trying and trying to get broadband! Anyway let's hope something positive can come about if B&B takeover Eircom. €100Million would do alot of good in enabling Exchanges and making more copper lines adsl ready.

jd

jwt wrote:

AFAIK a large percentage of the 2bn debt is to the government.

Any asset stripping could be stopped by the Gov. asking for a significant percentage of the cash profits being used to service the debt.

John

??
I don't believe the government took any of those bonds..

Sponge Bob

The real reason is twofold.

1. there is an insatiable appetite among investors, especially pension funds, for bonds, even crappy ones issued by third grade issuers like eircom. most of eircoms current debt is bonds and the new debt post B&B will be bonds , loads of them . The national pension fund may be one of these investors jwt .

2. Unlike most countries (and all developed ones) we have a totally useless regulator who does not set out a reasonable USO and then enforce it,. That means that they can reduce network related expenditure from takeover to takeover and Comreg lets them away with it.

eircomtribunal

And a nice article concerning ESOT in the Sunday Times today:

And Finally... Esot smiles like a fat Cheshire cat in anticipation of Eircom sale Brian Carey

IT looks like the national telecommunications network is to be sold off once more, like an old pair of garden shears at a jumble sale. If not to a Swiss telecom company, then to a Sydney fund manager.
Babcock & Brown will chip away here, tweak a bit there, put a bit of Scotch tape on the handles and off we go again. In three years’ time, Eircom will no doubt float again or be sold.

It would represent enormous cheek for the government, the trade union movement or its buddies in the Labour party to express concern at the development. The government directly facilitated the creation of the nation’s hand-me-down telecoms network. In the process, it also created one of the most generous tax breaks in state history, not for greedy builders, property developers or bankers, but for Eircom workers. And the workers once more find themselves in the box seat on takeover talks and ready to make another killing through Esot, their ownership trust.

Just as 400,000 ordinary shareholders were getting well and truly pasted financially in the Valentia deal in 2001, the government was feathering the nest of Esot. It allowed the workers’ trust to not only convert its shares in old Eircom to new Eircom, but it also allowed it to take payment in the form of preference shares. Without this deal, Eircom would never have fallen into the hands of venture capitalists.

And what a nest. Since its inception, Esot has distributed €424m to its members. All tax-free. Its remaining ordinary shares in Eircom will be worth up to €520m in a Babcock & Brown offer, and it owns a further €120m worth of Vodafone shares, a legacy of Eircom’s sale of Eircell in 2001.

That is €1 billion worth of stock that has been, or will be, distributed tax- free. And there is more. When Eircom was off the stock market Esot received dividends on both ordinary and preference shares amounting to €174m. A chunk of preference shares was also redeemed at a value of €66m. The outstanding value of preference shares is at least €100m. “I could not believe I had become so socialist in my old age that I was giving in to all the requests affecting Esots,” the then finance minister Charlie McCreevy said in a Seanad debate in 2001. How true.

Esot is a €1.4 billion, highly professional, hugely tax-efficient, money-making machine. It rolls on and will grind out further concessions from any bid from Babcock. Tax foregone to the state probably runs at nearly €300m. In the early 1990s, the Communications Workers Union, the main union at Telecom Eireann, as Eircom was then known, ran an anti-privatisation poster campaign. It said: “Don’t let the fat cats get their hands on Telecom Eireann.” It should have added: “Leave it to the workers.”

P.

P.S.: There's another article on the Babcock story in the Sunday Times here

cgarvey

netwhizkid wrote:

Noel O'Flynn regretted in to days Sunday Business Post that they had sold the Network. Well done Noel, It took your hum.... 7yrs to figure it out. This coming from a ticko...

Please refrain from using this forum to vent your political views. Most of it is off topic, tiring and sometimes inaccurate. You are NOT entitled to call someone a "ticko" here, regardless of your opinion of that person.

kaizersoze

Babcock & Brown now Eircom's main shareholder

March 02, 2006 09:16[FONT=Verdana, Arial, Helvetica, sans-serif] Australian investment group Babcock & Brown Capital has become the biggest shareholder in phone group Eircom, which it is considering buying.
B&B now has more than 23% of Eircom, a stock exchange announcement from Eircom this morning showed. With 253.4 million shares, B&B has overtaken the Employee Share Ownership Trust (ESOT) as the biggest shareholder in Eircom. The ESOT holds around 22% of Eircom.
If B&B increased its stake to 29.9%, the move would trigger a mandatory offer for the company.[/FONT]

http://www.rte.ie/business/2006/0302/eircom.html

zuma

Horror! wrote:

Babcock & Brown now Eircom's main shareholder

I feel sick!

If we follow Australia's example then they'll drop our max home connection to 1.5Mb/s!!!