Struggling telecoms operator Eircom’s examiner has declined a second offer from conglomerate Hutchison Whampoa, the owner of 3 Ireland. A proposed ‘scheme of arrangement’ is being circulated to creditors owned €3.4bn.
Last week it emerged that Eircom rebuffed a €2bn cash offer by Hutchison Whampoa, the Hong Kong-headquartered conglomerate headed by Li-Ka Shing that employs 230,000 people in 54 countries.
The new offer included a €50m cash offer to creditors who are likely to be wiped out if a deal between Eircom’s examiner and senior lenders goes ahead. The second offer also saw the "conditionalities" removed except for due diligence.
In a statement this morning, Eircom confirmed the examiner Michael McAteer of Grant Thornton declined a second offer for Eircom Group.
The examiner will today circulate to creditors of Eircom and Meteor proposals for a ‘scheme of arrangement’ ahead of a creditors’ meeting next Friday (18 May).
Eircom is endeavouring to exit the examiner process in the coming weeks and shave off about €1.7bn worth of debt. Somehow it intends to pump €400m into a fibre rollout that will connect 1m homes to fibre over the next three to four years.
Eircom at the crossroads
Despite its €3.4bn in debts, Eircom is a hugely cash-generative business and if it can exit the examinership process hopefully it can get back on the right road.
However, the cash offer by Hutchison Whampoa offers some interesting possibilities. Hutchison Whampoa, owner of 3 Ireland, has deep pockets and could easily afford to make the kind of infrastructure investment that an incumbent operator like Eircom needs to make in order to to serve Ireland in the 21st century.
Either way, the sad saga of Eircom over the last 13 years needs to come to a close.
In 1999, the State made €7bn out of the IPO of Eircom, which at the time was debt-free. In 1999, Eircom had 14,000 employees. Today it has about 5,000 employees and is €3.4bn in debt.
In the last 13 years since the IPO, the company has had seven owners.