Eircom owner submits rescue proposal

SINGAPORE Technologies Telemedia, the owner of Irish telecoms group eircom, submitted a restructuring proposal to its independent directors and senior lenders yesterday in a bid to keep hold of the debt-laden company.

Struggling with debt and suffering from under- investment since privatisation in 1999, the former state-owned telecoms group risks defaulting on its €3.75 billion borrowings if it is unable to restructure that debt.

Eircom said earlier this month it had received two restructuring proposals, one from a group of first lien senior lenders owed €2.4bn, the other from a group of second lien senior lenders owed about €350 million.

First lien lenders have offered to take a hit of about 8% on their debt and extend its maturity in return for full ownership of Ireland’s largest telecoms group, a source familiar with the process told Reuters.

STT and trade union ESOT, which owns nearly 35% of the group, had opted not to submit a proposal by a December 2 deadline, citing concerns over the eurozone debt crisis.

“While it is difficult to comprehensively assess the impact on Eircom of any possible changes that may occur within the eurozone, we have submitted a balance sheet restructuring proposal,” STT said.

“Our proposal is targeted at giving Eircom an optimal chance to be competitive and viable by addressing the company’s long-term balance sheet issues, while supporting its ongoing business strategy.”

Eircom said ESOT was in talks with STT about participating in its proposal. STT did not give any other details on the offer.

Eircom said earlier this month it had requested a covenant waiver from senior lenders from December 15 until the end of January and it would provide an update on that request by December 15.

Second lien lenders have proposed writing off €100m owed to them and converting the remaining €250m into a new junior ranking mezzanine loan.

— Reuters