eircom staff to share in €446m dividend payment
The 13,000 members of eircom’s employee share ownership trust (ESOT) will receive €165m in dividends from its 30% stake in the company, equivalent to around €12,500 for each member of the ESOT. However, it is not known if all of the cash will be paid out in one lump sum.
It also emerged the company’s largest shareholder, America firm Providence Equity Partners, will receive just over €200m, while Soros Private Equity, owned by billionaire currency speculator George Soros, will receive around €85m.
Tony O’Reilly, the chairman of the Valentia consortium which bought eircom in late 2001, will get close to €20m in dividend payments for his 4% stake in the company.
The remaining cash will go to the American investment bank Goldman Sachs, which has a small stake in eircom.
ESOT was one of the biggest beneficiaries of the eircom saga, it increased its stake from just under 15% when it was a public company to the current 30% and gained two seats on the board of directors.
The payments are bound to anger the thousands of small shareholders who were burned when the company was taken private by Valentia. The majority of small investors who held on to the shares until it was bought by Valentia suffered losses of more than 30% on their initial investment in the company.
Eircom, then Telecom Eireann, was privatised four years ago in a blaze of publicity and half a million Irish people bought shares in the company. Shortly after the flotation the shares fell heavily and the company sold off its mobile phone unit to Vodafone. While shareholders also received shares in Vodafone, they are still sitting on heavy losses.
Eircom also said yesterday that it made operating profits of €180m in the year to the end of March, up from €138m the previous years. The company’s turnover fell slightly from €1.7 billion to €1.68bn. Its workforce fell once again with 8,500 now employed, a drop of 500 and it expects this number to fall to 7,500 by the end of next year.
Although it had reduced its debt to €1.8bn in the last two years, yesterday’s refinancing will bring the debt levels back up to €2.4bn, to avail, it says, of historically low interest rates rather than to facilitate the dividend payment.
Eircom said last night it was committed to a €1bn, five-year improvement of its high-speed broadband internet infrastructure.
