Three subsidiaries of Ireland’s incumbent telecoms operator Eircom Group have applied for examinership in the High Court. The companies include Eircom Ltd, Meteor Mobile Communications and Irish Telecommunications Investments Ltd.
Mr Justice Peter Kelly has confirmed court protection for the three companies and will give his decision on the appointment of an interim examiner tomorrow.
The company says there will be no direct impact on employees and who will be paid on time.
Eircom also said suppliers will continue to be paid as per agreed terms and customers and services will not be impacted during the process.
Examinership is a necessary step for Eircom and its lenders to reconstruct debt arrangements and avoid liquidation.
Yesterday, Eircom CEO Paul Donovan said he would be stepping down from the company at the end of this year.
The decision to go for examinership was backed by two classes of lenders to Eircom – first lien and second lien – who are owned €2.7bn worth of Eircom’s €3.7bn massive debt pile.
The road back
Once an examiner is appointed it is understood Eircom will have over a month to come up with a plan to return the company to viability.
It has been reported that Eircom and its supportive lenders will seek to write off €1.7bn worth of debt.
In addition, ERC Holdings Ltd said it was ‘in principle supportive’ of a revised proposal submitted by first lien senior lenders that may kick start a €400m investment plan to fibre-connect 1m Irish homes in the next three to four years.
Examinership is ultimately the latest destination on a long, painful road for Eircom that began in 1999 when the Irish Government agreed to IPO a debt-free Telecom Eireann with 14,000 employees.
In the intervening years, Eircom has had seven different owners, including the Valentia Consortium, Babcock & Brown and Singapore Technologies Telemedia.
Roll forward to 2012 and as examinership beckons Eircom is €3.7bn in debt and employs 5,000 people.
Eircom said today that the company’s day-to-day operations will be managed by Donovan.
“This is a necessary and unavoidable step on our journey to addressing the unsustainable level of debt on our balance sheet and continuing our operational transformation into a vibrant and competitive company,” Donovan said.
“I would like to reassure all our customers, suppliers and employees that it is very much business as usual during the examinership process.”