eircom to restructure EUR4 billion debt

5 Nov 2007

Irish former fixed line monopoly eircom is planning to restructure its EUR4 billion (USD5.8 billion) debt for the third time in two years, writes The Sunday Business Post. The company’s 57% majority shareholder, Australian investment firm Babcock & Brown Capital (B&B), will most likely implement the refinancing plan in early 2008, subject to an improvement in the world’s debt markets following the recent credit crunch. B&B is understood to favour another debt restructuring following its recent move to sell off EUR150 million of its phone masts, and the sale and leaseback of buildings that are now surplus to requirements. The Australian group says the asset sales have been beneficial to eircom which is generating cash and in a ‘strong position in relation to its financial covenants’.

B&B and the Employee Share Ownership Trust (ESOT), which owns 35% of eircom, have already issued paper debt worth EUR425 million, allowing the two shareholders to take back around half the equity they spent to fund the telco’s takeover. However, this refinancing plan upped eircom’s debt burden and used up a significant portion of its free cash for debt repayments. In 2007, the former monopoly carried out a second debt restructuring exercise designed to cut interest payments by EUR60 million over four years. A third restructuring is hoped to cut its interest payments once again and give the company ‘greater breathing space’.

Ireland, eir