Ireland’s former state monopoly telecoms operator Eircom could be sold to Singapore Technologies Telemedia (STT) ‘by the end of next week’, sources familiar with the situation have told the Irish Independent.
Earlier this month CommsUpdate reported that STT, the investment fund controlled by Temasek Holdings, submitted a revised offer for the 57.1% of Eircom held by Australian investment fund Eircom Holdings (ERC). In a statement published by the Australian Securities Exchange, ERC’s board confirmed it had studied and approved STT’s ‘definitive proposal’ to acquire all of ERC’s issued share capital. The Singapore-based group is offering ERC shareholders AUD0.40 (USD0.34) per share and has promised to distribute ERC’s available cash surplus in the form of a capital return; it assumes the capital return will be equivalent to AUD0.97 per share. Under the revised proposal, shareholders can also opt to receive an alternative share in a company called BidCo, an unlisted enterprise that will be incorporated in the Cayman Islands, in lieu of exchanging their shares for money.
If and when a deal is agreed, STT will own about 51% of BidCo, while the Eircom Share Ownership Trust (ESOT), which already owns 35% of Eircom, will transfer its stake to the new firm. The paper says ESOT has already informed the Republic’s Revenue Commissioners of its plans to transfer its existing stake to the new entity and it is understood that the tax treatment of the trust will not be altered as a result of the deal. Och-Ziff Capital Management, a leading hedge fund, will also own about 7% of BidCo once a deal is struck, while the remaining 7% will be held by a number of other shareholders. Although an agreement appears to be in the pipeline, a number of issues still need to be resolved, such as the management fee to be paid by STT to run Eircom. If the sale goes through it will be the fifth time Eircom has changed hands since it was privatised in July 1999. Shares in ERC, formerly known as Babcock Brown Capital (BCM), were suspended on Sydney’s bourse in early August while the fund’s board considered STT’s new proposal.