Eircom staff get €50m in off-load

EIRCOM employees pocketed another €50 million yesterday after its staff trust off-loaded part of its 29% stake in the former State phone company.

The Employee Share Ownership Trust (ESOT), which operates on behalf of around 14,500 current and former Eircom staff, sold a 4.1% shareholding in the market at €1.655 per share.

Eircom shares closed at €1.67 last night.

The ESOT was the latest of Eircom's major shareholders to cash in on its stake since it returned to the stock market in March.

Billionaire financier George Soros sold his remaining 2% holding earlier this week, generating €24m. Mr Soros once held 18% of Eircom and was instrumental in the 2001 deal that saw the company depart the stock exchange before returning three years later.

He made a total profit of approximately €100m from his dealings in Eircom, almost doubling his original investment. Fellow investors Providence Equity Partners and Independent News & Media's Tony O'Reilly enjoyed similar returns.

The decision not to off-load the shares when Eircom floated for the second time benefited the ESOT to the tune of more than €3m, as the price obtained yesterday was more than 10c, or 6.5%, higher than the €1.55 level where shares in the company restarted trading in March.

The ESOT has given an undertaking it will sell no further shares for at least three months.

Davy Stockbrokers analyst Jack Gorman said the sale came as no surprise because the ESOT had indicated in March it would gradually reduce its stake in the company over time.

The trust is legally obliged to be wound down in the next 10 years, but can only distribute a maximum of €124m in any one year to avoid falling foul of tax rules. This would place a ceiling of approximately €10,000 on the amount individual ESOT members could receive in one year.

The trust yesterday also said it would distribute a further 3 million shares to members, worth €5m.

Individual trust members will receive shares worth between €350 and €400.

The ESOT's remaining 24.7% stake is valued at more than €300m but it also holds special preference shares that were worth around €170m when Eircom refloated.

Mr Gorman said there was no indication any of these shares had been converted into cash or other assets since. It's understood trust members who want their share of cash from yesterday's sale can get it.