Eircom to exit examinership on 11 June

22 May 2012

The High Court has approved a scheme recommended by Eircom’s examiner Michael McAteer that will allow it to exit examinership on 11 June. Under the scheme of arrangement Eircom’s debt is to be reduced by 40pc.

Under the scheme from 11 June Eircom’s senior lenders will become shareholders.

The entire issued share capital will transfer to a company owned by the senior lenders.

ST Telemedia and the Employee Share Ownership Trust (ESOT) will cease to be shareholders.

The debts on Eircom Group’s balance sheet will be reduced by 40pc to €2.3bn from €4.bn.

It is also understood that the new scheme of ownership will safeguard the jobs of over 5,000 employees.

In terms of the debts being written off, first lien lenders will see the money they are owed reduced by 15pc, second lien lenders’ debt reduced by 90pc. Each secured creditor will receive a shareholding equal to their share of the remaining €2.3bn of debt.

Unsecured creditors will be paid in full and an additional lending facility of €150m.

“Today is an important day in the history of Eircom,” CEO Paul Donovan said.

“The Group entered the examinership process with the objectives of significantly reducing debt levels and placing the company’s balance sheet on a stable financial footing for the medium to long term. These objectives have now been achieved.

“I would particularly like to thank all of our customers, partners and suppliers for their patience and loyalty throughout this period of transition. Today’s developments underline the commitment from eircom as the state’s largest telecommunications company, to ensure we are fully aligned with the national objective for strategic infrastructure.

“A stronger Eircom is good for Ireland. The Group will continue with its operational transformation into a more vibrant and competitive business continuing to invest in new products and services while reducing costs.”

John Kennedy is a journalist who served as editor of Silicon Republic for 17 years