Eircom private firms to bag €470m

THE two private equity firms, who are the largest shareholders in Eircom, will net close to €470 million when the telecoms company floats on the stock market later this month.

Providence Equity Partners, the US private company that led the takeover of Eircom in 2001, holds a 44% stake. It will sell all but 4.8% of its holding in the initial public offering (IPO) in two weeks, according to a prospectus issued yesterday.

George Soros, the billionaire investor, will sell all but 1.95% of his 18% stake.

Eircom will come to the market at a price between €1.48-€1.75 and be valued at between €1.1 billion and €1.3bn.

At the middle of this price range (€1.615) Providence will net €333m, while Mr Soros will get €133m.

The IPO will also be a winner for the company’s chairman Tony O’Reilly, who is selling his 5% stake. This will net the Independent News & Media executive chairman €45m.

He will remain as Eircom chairman.

After the flotation the company employees will own 29.2% of Eircom as they are not selling their stake.

Based on the indicative prices, this stake could be worth e400m at the upper end of the price range.

Eircom’s senior executives will also see a bonanza from the IPO.

Chief executive Dr Philip Nolan will end up with 1.8m shares in the company, worth just over €3m. He will sell 702,457 shares in the IPO, netting €1.1m.

Finance director Peter Lynch will hold shares worth €903,363 post-IPO; commercial director David McRedmond will hold a stake worth €677,725 and retail chief Cathal Magee will own shares worth €903,363.

The flotation of Eircom on the Dublin and London stock markets will also prove a windfall for the company’s bankers and financial advisers

Deutsche Bank, Citigroup Global Markets, Goldman Sachs and Morgan Stanley will receive €12m in fees and expenses, it was disclosed yesterday.