Eircom set to be sold to Singapore's STT

bealtine

http://www.rte.ie/business/2009/0914/eircom.html

Monday, 14 September 2009 07:54

The Australian owners of Eircom have reached a deal with Singapore Technologies Telemedia (STT) for the takeover of the company.

The board of Eircom Holdings, formerly known as Babcock and Brown Capital, is recommending to shareholders that they accept the offer, which will be voted on at a meeting in Sydney in December.

A statement said the offer was equivalent to A$1.335 ($1.15) per Eircom share, representing a 20.2% premium to the closing price on 24 June 2009, the last closing price before the announcement of STT's initial proposal.


The company's ESOT - the employee share ownership trust - which owns 35% of the company has agreed to co-operate with the deal.

The chief executive of Eircom, Paul Donovan, described the announcement as a positive development which brings important clarity to the ownership speculation that has been hanging over the group for much of 2009.

If the deal goes through with Singapore Technologies Telemedia, this would be Eircom's fifth change of ownership since it was privatised in 1999.

trekkypj

The question is - will STT be prepared to invest in the network and run it like a telecoms company? Or will it be more of the same? That's what I'm afraid of.

And what will happen with respect to ESOT and their ownership stake - will it be purchased at some future date?

trekkypj

Another story here...


http://www.irishtimes.com/newspaper/breaking/2009/0914/breaking14.htm

Terms agreed for Eircom sale
CIARA O'BRIEN

The Australian owner of Eircom has agreed terms with STT Communications (STTC) for a possible takeover of the Irish telecommunications firm.

The offer equivalent to A$1.335 per Eircom Holdings(ERC) share, which includes the proposed capital return of A$0.80 per share previously announced by ERC. This values the firm at A$224.15 million (€132.57 million) and is a 20.2 per cent premium on the closing price of A$1.11 per ERC share on June 24th, the last close before STTC’s proposal was announced.

The board of ERC, formerly known as Babcock Brown Capital, is recommending the offer led by STT, a subsidiary of Singapore Technologies Telemedia. The employee share ownership trust (ESOT), which has a 35 per cent stake in the company, has also agreed to back the deal.

Eircom chief executive Paul Donovan said in a statement this morning it was a "very positive development" and brings "important clarity" to the speculation that has surrounded Eircom for much of the year.

“It is my hope that the transaction will be concluded swiftly and we in Eircom will continue in parallel to drive operational programmes that will transform the company at a time when the challenges in Ireland’s communications sector have never been greater, and the imperative in overcoming them more acute,” he said.

A successful deal with STTC will mean the fifth change of ownership the telecoms firm has had since it was privatised just over 10 years ago.

“For some eighteen months now, the directors of ERC have engaged in an extensive strategic review of ERC designed to address the many concerns communicated to the board by shareholders and to maximise value for ERC shareholders," chairman of ERC Kerry Roxburgh said.

"This process has resulted in the termination of the management arrangements with Babcock & Brown along with proposals to return surplus capital to ERC shareholders."

ST Telemedia said the it was hoping to work with the Government, ComReg, ESOT and Eircom management and employees to continue to develop the telecoms firm.

The deal's announcement was welcomed by Chambers Ireland’s Digital Policy Council today.

“Ireland needs continual and significant investment in broadband rollout across the country. A vibrant Eircom competing with other fixed line, wireless and cable broadband operators can deliver this goal. This deal will not only facilitate this but also brings clarity to the ownership speculation that has been in place for the past number of months,” said Digital Policy Council chairwoman Claire Cunningham.

“If this takeover is successful, then Eircom’s new owner will bring an interesting perspective to competition issues in Ireland given that it is a non-incumbent challenger brand in Singapore."

The most recent accounts for the telecoms firm showed the company incurred an operating loss of €486 million in the year to June.

Revenue fell 3 per cent to €1.99 billion, while adjusted earnings before interest tax depreciation and amortisation (Ebitda) dropped 1 per cent to €692 million. The company also lost 67,000 fixed-line contracts during the year.

However, Meteor - the company's mobile unit - saw its revenues and profit rise.

Tom Young

Its a monopolist buying a monopolist. Who in their right mind would do anything else unless they were buying same and in a time where the markets are in a shocking state.

Tom

Sponge Bob

Creditors asked to take 84pc haircut in restructure (from 2002)

Hutchison Whampoa and Singapore Technologies Telemedia (STT) have asked Global Crossing creditors to take a 84.2 per cent haircut on US$7 billion they lent the company.

According to a document submitted to a New York court, 21 per cent of the restructured international Internet protocol network provider would go to its creditors, while Hutchison and STT would have a combined 79 per cent. Global Crossing shareholders would get nothing in the restructuring.

bk

Sponge Bob wrote: »

Creditors asked to take 84pc haircut in restructure (from 2002)

Well if STT could actually achieve the same with Eircom it would be good, as then they might have the money to actually invest in the network rather then just paying off debt interest.

Tom Young

I wonder does the Hutch share need approval!? Given the market presence they have here.

Tom

Sponge Bob

Hutch were blown out of that bid by Dick Cheney and STT eventually got Global Crossing on their own 61% not 79% . I was illustrating the point that the bondholders took a large bath !