Employees set to reap €300m windfall from sale

EIRCOM’S current and former employees are likely to get windfall payments later this year from the sale of their stake in the company.

The employee share ownership trust (ESOT) will net around €500m from the sale of its 22% stake in Eircom to Babcock & Brown, which yesterday announced details of its €2.20 a share bid for the company. After paying off loans and reinvesting part of the proceeds back into Eircom, around €300m will be left to distribute to the 14,000 ESOT members.

Though no formal plans to distribute the cash have been announced, it is understood a payment could be made later this year when the takeover in finalised. ESOT members could get up to €20,000 each.

Since 1999 when Eircom was privatised, the ESOT members have netted €45,000 on average from the various pay-outs.

The ESOT also holds a substantial number of shares in Vodafone, which it got when Eircom sold its mobile phone arm Eircell in 2000. These shares will also be cashed in and distributed to ESOT members at some stage in the future.

The ESOT will take a 35% stake in BCM Ireland Holdings, the vehicle that will own Eircom after the takeover, and will nominate two board members.

These will be John Conroy, an existing Eircom director, and Con Scanlon, the company’s deputy chairman and general manager of the ESOT.

Mr Scanlon said in a statement yesterday: “We look forward to increasing our ownership stake ... and to continuing to play a key role in the future success of the business. We are particularly pleased that this has been achieved in a way that allows the ESOT to make substantial distribution to beneficiaries over the next few years.”

Babcock director Robert Topfer said yesterday that he was happy to have ESOT on board as partners. He said Babcock would have been “disappointed if they wanted less (of a stake) than they currently have”.

Babcock was silent yesterday on how many more jobs will go at Eircom.

Around 2,500 people have left Eircom since it was taken over by the Valentia consortium, in 2001, bringing the workforce us down to just under 7,500.

Pierre Danon, chairman designate, said the company hoped to generate further efficiencies, but would not say if that involved further redundancies.