Loss proposal for Eircom lenders

THE owner of struggling telecoms group Eircom has asked its most senior lenders to accept a 25% loss on their debt and wants a guarantee any money it invests is protected if Ireland leaves the euro, a source told Reuters yesterday.

Singapore Technologies Telemedia (STT) submitted a proposal to eircom independent directors and senior lenders on Monday to restructure the operator’s €3.75 billion debt pile in a bid to keep hold of the company.

Eircom’s independent directors are evaluating three proposals to restructure the debt, including one from a syndicate of first-lien senior lenders owed €2.4bn, and another from a group of second-lien senior lenders owed around €350m.

The terms of STT’s offer are significantly worse than a proposal made earlier this year, a syndicate source said.

The latest proposal would require senior lenders to accept a 25% impairment of their debt, up from 8% in the earlier proposal.

STT would invest €200m into the firm, down from €300m in the earlier proposals. Half would be paid up front and the second half a year later.

It also includes a material adverse change clause, which would make STT’s new investment senior to all other debt if Ireland leaves the eurozone, the source said.

The Irish Government has repeatedly said it will not abandon the euro, but analysts have warned some weaker countries could be forced to leave if Europe’s debt crisis deteriorates.

Reuters