CWU urges Eircom stakeholders to accept STT restructure proposal

bealtine

http://www.siliconrepublic.com/business/item/25051-cwu-urges-eircom/

The Communications Workers Union has urged Eircom stakeholders and lenders to consider Singapore Technologies Telemedia’s (STT’s) offer to restructure and ultimately save the business.

Eircom's lenders first and second-lien leners have voted to extend a "covenant waiver" on the company's massive €350m debt until 31 January, enabling it to avoid liquidation. There are a number of proposals on the table.
Eircom's majority shareholder STT has offered to buy back the business, provide a €200m rescue investment and is in talks with ESOT (Employee Share Ownership Trust), which has one-third of Eircom shares, about a joint bid.
A chance to rebuild Eircom

Steve Fitzpatrick, General Secretary of the Communications Workers' Union, said: "This proposal represents the best opportunity to rebuild Eircom and provide a secure future for its customers and its workforce. STT are the first telecommunications company to be involved in eircom since its disastrous privatisation and there is little doubt that the company needs the industry knowhow and technical ability that STT brings to the table."

He said: "STT has also worked at developing a professional relationship with the industry in Ireland, including the regulator Comreg and the Department of Communications. Its investment plans including the roll out of a next generation broadband network which is an absolute necessity for Ireland, and critical to future inward investment and the ultimate recovery of the Irish economy."

Fitzpatrick urged all the parties engaged in negotiations on eircom's future to redouble their efforts so that finality and closure can be achieved from the ongoing restructuring process.

He said: "It has been and is a very worrying and stressful time for all of the staff who had committed so much to keeping the business on track over the last number of years through pension remediation, pay freezes and pay cuts.

“It is now time for the continuous distraction of these long running financial structural discussions to be brought to a conclusion and allow the company to be run in an straightforward commercial manner."

He added: "This long running saga should and could have been resolved in the summer and in the autumn with the acceptance of one of the earlier bids tabled by STT. The ongoing euro crisis, and the lack of interest from any other key industry players, has resulted in the most recent impasse which should have been avoided," Fitzpatrick warned.

bealtine

http://www.irishtimes.com/newspaper/finance/2011/1217/1224309215564.html

EIRCOM’S SENIOR lenders have rejected a debt restructuring proposal put forward earlier this week by majority shareholder Singapore-based STT.

A committee representing first-lien lenders, who are owed about €2.6 billion, informed STT and Eircom’s independent directors yesterday that they were terminating discussions on the proposal, which was tabled on Monday.

Informed sources said the lenders now plan to press ahead with their own proposal, which would involve them taking full ownership of Eircom.

It is believed the main sticking point for the lenders was the material adverse clause inserted in STT’s proposal.

STT, which currently owns 65 per cent of Eircom, had offered to invest €100 million in equity upfront and the same after 12 months. However, it wanted the initial €100 million to be repaid in the event of Ireland leaving the euro within 12 months of the funds being handed over.

In effect, this investment would have enjoyed a “super senior” creditor status. This clause was not acceptable to the senior lenders.

Eircom declined to comment yesterday on the latest twist in this long-running restructuring saga.

STT and the first-lien lenders also declined to comment.

It is understood Eircom’s independent directors – chairman Ned Sullivan, chief executive Paul Donovan, Bernard Somers and Nick Hartery – will meet next week to discuss the proposals they have received.

They could bring a recommendation to the full board of the company before the end of the week.

Eircom’s second-lien lenders have also tabled an offer, although this appears to have little chance of being accepted.

The proposal from the first-lien lenders involves them taking a haircut of 7.5 per cent on their debt. This equates to about €195 million.

They would also extend the maturity of the debt by three years out to 2017.

The lenders would offer equity participation to senior executives of up to 10 per cent.

Significantly, they support management’s business plan for Eircom, which involves an investment of €300-€400 million in a fibre network rollout to a million homes across the country, beginning in January.

The lenders do not propose to inject new equity into Eircom, which had €392 million in cash at the end of October.

In total, Eircom has net debts of €3.7 billion. Only the first-lien lenders are expected to be repaid.

The employee Esot, which owns 35 per cent of Eircom, also currently faces being excluded from the restructuring process.

In a statement yesterday, Steve Fitzpatrick, general secretary of the Communications Workers Union, said: “It is now time for the continuous distraction of these long-running financial structural discussions to be brought to a conclusion and allow the company to be run in an straightforward commercial manner.”

watty

Snouts and Troughs?

http://www.independent.ie/business/irish/eircom-chiefs-in-line-for-a-euro27m-debt-deal-mega-bonus-2966981.html

clohamon

watty wrote: »

Snouts and Troughs?

EIRCOM CEO Paul Donovan and other top executives would share up to €8m if Singapore Technologies Telemedia's debt restructure proposal is accepted by lenders, a source said.

http://www.independent.ie/business/irish/eircom-chiefs-in-line-for-a-euro27m-debt-deal-mega-bonus-2966981.html

It is understood Eircom’s independent directors – chairman Ned Sullivan, chief executive Paul Donovan, Bernard Somers and Nick Hartery – will meet next week to discuss the proposals they have received.

http://www.irishtimes.com/newspaper/finance/2011/1217/1224309215564.html

Surely that isn't the same Paul Donovan that's being offered a whack load of money to accept the STT offer?

paulm17781

I don't understand why STT bought Eircom. Surely they new the bad state of the company. I had expected a better bid than that which they've offered, it now looks like they'll be forced out. Strange move unless I'm missing something.

watty

I think they had a plan to "haircut" the bond holders seriously as they did when they bought "Global Crossing".

Unless the Debt is reduced under 1.5Billion, it's probably cheaper to invent a new network with Fibre than invest ANYTHING in Eircom. Basically the previous carpet baggers have destroyed it with leverage buyouts and asset stripping.

jmcc

So is Eircom and the ESOT toast?

Regards...jmcc