Court approves Eircom scheme

A five-year survival scheme for Eircom approved by the High Court yesterday will see it and related companies exit the State’s biggest ever examinership on June 11.

Mr Justice Peter Kelly confirmed the scheme advocated by Michael McAteer, examiner to Eircom Ltd, Meteor Mobile Communications, and Irish Telecommunications Investments Ltd, and endorsed by most of its creditors.

The scheme would safeguard most of almost 6,000 jobs, and Mr Justice Kelly was told there would be no job losses above 1,000 to be achieved via a programme of voluntary redundancies.

Mr Justice Kelly said he was satisfied to approve a business plan and restructuring plan aimed at reducing the companies crippling indebtedness to €2.35bn from €4bn and with the added advantage of securing their future over five years.

A line of credit was also to be made available by the companies secured lenders and the companies had €22m cash ahead of projected figures at this stage, he noted.

Based on the evidence, he was satisfied the scheme was of benefit to the companies, their employees, and the State arising from the strategic importance of Eircom.

Mr Justice Kelly was also satisfied the scheme did not unfairly prejudice any class of creditors, as the unsecured creditors who would get nothing under the scheme would also have got nothing in liquidation.

The scheme will involve first lien creditors, owed €2.7bn, and swop creditors taking a cut of 15% on their debt and second lien creditors a cut of 90%.

The restructuring proposals will involve the secured creditors taking over the equity of the companies via a structure of companies. The €350m debts of floating-rate noteholders will be wiped out.

Earlier, Paul Sreenan SC, for the examiner, said the proposed scheme would reduce the companies historic indebtedness and secure their financial position for five years, he said. It would also secure the vast majority of the jobs that would have been imperilled in a liquidation.