Action casts doubt on Eircom plan

An unprecedented application to come before the Commercial Court today has cast doubt about plans by Eircom’s examiner to finalise a survival scheme with creditors on Friday for companies employing 5,800 people.

New York-based DW Investment Management LP (representing 52.4% of creditors of Eircom holding €350m Floating Rate Notes (FRNs)) and Hutchison Whampoa (HWP), parent company of mobile phone operator 3 Ireland, have taken proceedings following last week’s decision of Eircom examiner Michael McAteer rejecting a revised €2bn cash offer for Eircom from 3 Ireland and HWP.

Under the proposed scheme of arrangement for Eircom Ltd, Meteor Mobile Communications and Irish Telecommunications Investments, the floating rate note-holders will not receive a dividend and will have their debt “extinguished”.

DW Investment Management claims its clients are unfairly prejudiced by the scheme as the HWP proposals would involve a €50m payment for FRNs.

HWP has alleged that “lock-in” restructuring proposals for the Eircom companies agreed between the companies and creditors around the time of the examiner’s appointment have prevented exploration of potential investment opportunities and effectively pre-determined the success of the proposed scheme of arrangement.

Mr Justice Peter Kelly yesterday agreed to allow the application be served on the examiner and returned the matter to today.