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Digicel linked with possible Eircom bid, paper says

31 Oct 2011

The Irish Independent newspaper is reporting that Jamaica-based regional mobile operator Digicel Group may have expressed an interest in acquiring the Republic’s debt-laden former monopoly operator Eircom. Although Denis O’Brien’s Caribbean operation is remaining tight-lipped over the rumour, the paper claims that Eircom, which is embroiled in efforts to address its massive EUR3.7 billion (USD5.2 billion) debt pile, has received an approach from an as yet unnamed third party. For its part, Eircom has also declined to comment on the speculation. Meanwhile, the Hong Kong conglomerate Hutchison Whampoa, which owns and operates 3 Ireland, has also been touted as another possible interested suitor.

As reported in CommsUpdate earlier this month, Eircom floated a plan to offer its principal lenders a 20% stake plus EUR300 million in cash payments, in a move that would allow shareholders to retain control of the company. The telco’s main lenders are collectively owed EUR2.4 billion and are considering the offer as part one of what looks to be a long-running process to resolve the telco’s financial problems. Under the plan though, other lenders stand to lose the EUR1.3 billion they are collectively owed, it added. As a further initiative, Eircom is set to pay out EUR300 million to repay approximately 11% of its top-ranked loans early, leaving 80% of the EUR2.4 billion sum to be restated as new debt. It has taken more than twelve months for a substantive restructuring plan designed to tackle Eircom’s unsustainable levels of debt to make it off the drawing board. It is understood this proposal is being backed by Singapore Technologies Telemedia (STT), which owns two-thirds of the operator, and the employee shareholder trust ESOT, which owns the rest. If carried out, the current shareholders would retain a majority stake and control of Eircom.

Ireland, eir

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