A €200m proposal to restructure Eircom by ST Telemedia (STT) has been rejected by the incumbent operator’s first lien lenders and as a result STT members of Eircom’s board have resigned with immediate effect.
In recent weeks Eircom’s first and second-lien lenders voted to extend a “covenant waiver” on the company’s massive €3.7bn debt debt until 31 January, enabling it to avoid liquidation.
A number of proposals had been tabled to save the business and in one proposal Eircom’s majority shareholder STT offered to buy back the business, provide a €200m rescue investment and was in talks with ESOT (Employee Share Ownership Trust), which has one-third of Eircom shares, about a joint bid.
However, STT’s offer has been rejected.
As a result Eircom said this morning it will go ahead with detailed discussions with the first lien coordinating committee on its proposal to restructure the company’s balance sheet submitted 2 December.
As a result all STT directors on Eircom’s board have tendered their resignations with immediate effect.
Independent directors and ESOT directors remain on the board of Eircom.
Ned Sullivan, Chairman of eircom, said, “After many months of deliberations, today’s announcement regarding a majority of the First Lien lenders choosing to implement the proposal by the FLCC provides an environment of certainty for all the parties to move forward with the restructuring process.
“I would like to acknowledge the very valuable contribution of STT and the STT directors to the development of the Group over the past two years,” Sullivan said.
In January 2010 STT acquired a controlling interest in Eircom in a €140-million cash and shares deal.