Eircom’s creditors question telco’s solvency, paper says

19 Aug 2011

Unconfirmed reports from RTE News claim that a committee representing so-called ‘Pik [payment-in-kind] note loan holders’ in Irish former monopoly operator Eircom has written to the board of ERC Ireland Preferred Equity Ltd, the operator’s ultimate parent company and the entity that issued the loan notes, claiming it has reason to believe Eircom is insolvent. The long-running saga over the telco’s finances has taken a fresh twist with the news that the committee is also asking ERC Ireland how exactly it intends to repay Eircom’s debt, whilst simultaneously accusing the directors of the parent group of breaching their duty of care towards them. In a hand-delivered letter to the Cayman Islands-based parent, the committee has reportedly warned that the loan holders ‘will take legal or other action if necessary to protect their position’. Part of the complaint apparently reads: ‘The committee believes that the directors of the company are not taking active and independent steps to safeguard the interests of the company’s creditors, the holders of the Pik notes, and are putting those interests at risk by their failure to do so.’ The Irish Times adds that Pik loanholders will be at the bottom of the list when it comes to settling Eircom’s creditors – and could face having their roughly EUR670 million (USD966 million) in loans wiped out.

Ireland, eir