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Lenders to take over Eircom as owners fail to do deal on debts
telecoms
By Donal O'Donovan
Saturday December 03 2011
EIRCOM is certain to be taken over by its lenders after its owners shunned a second deadline to make an offer to stay in control of the business.
ST Telemedia, Eircom's Singapore-based majority owner, and the Eircom employee shareholder trust failed to table an offer for the company after an extended deadline to submit bids passed last night.
It means there will now be a straight fight between two sets of lenders for control of Ireland's most important privately owned infrastructure business.
The news is a major blow to government hopes of seeing a revived Eircom play a major role in new infrastructure projects.
Both of the lender groups are dominated by global hedge funds and investment banks, with little direct experience of running a telecoms business.
Neither of the two remaining bidders is willing to put any new money into the company.
Eircom has a cash pile of €400m, and both sets of lenders claim that cancelling around €1bn of the company's debt will be just as effective as investing fresh cash, in terms of helping a turnaround.
Eircom's own managers, however, are convinced of the need for fresh investment to help turn the business around.
Last night, ST Telemedia blamed the crisis in the eurozone for the decision to walk away.
"Owing to the continuing macro-economic uncertainty in the eurozone, ST Telemedia has not submitted a proposal on December 2. We continue to monitor and evaluate our investment position, and remain in discussion with the company and the First Lien Co-ordinating Committee."
Burden
ST Telemedia bought a majority stake in Eircom for just €30m two years ago, but the deal left the company saddled with an unsustainable €3.7bn debt burden built up by its previous owner.
telecoms
By Donal O'Donovan
Saturday December 03 2011
EIRCOM is certain to be taken over by its lenders after its owners shunned a second deadline to make an offer to stay in control of the business.
ST Telemedia, Eircom's Singapore-based majority owner, and the Eircom employee shareholder trust failed to table an offer for the company after an extended deadline to submit bids passed last night.
It means there will now be a straight fight between two sets of lenders for control of Ireland's most important privately owned infrastructure business.
The news is a major blow to government hopes of seeing a revived Eircom play a major role in new infrastructure projects.
Both of the lender groups are dominated by global hedge funds and investment banks, with little direct experience of running a telecoms business.
Neither of the two remaining bidders is willing to put any new money into the company.
Eircom has a cash pile of €400m, and both sets of lenders claim that cancelling around €1bn of the company's debt will be just as effective as investing fresh cash, in terms of helping a turnaround.
Eircom's own managers, however, are convinced of the need for fresh investment to help turn the business around.
Last night, ST Telemedia blamed the crisis in the eurozone for the decision to walk away.
"Owing to the continuing macro-economic uncertainty in the eurozone, ST Telemedia has not submitted a proposal on December 2. We continue to monitor and evaluate our investment position, and remain in discussion with the company and the First Lien Co-ordinating Committee."
Burden
ST Telemedia bought a majority stake in Eircom for just €30m two years ago, but the deal left the company saddled with an unsustainable €3.7bn debt burden built up by its previous owner.
