Eir seeks to raise at least €350m in capital

Telecoms company Eir is seeking to raise at least €350 million to take out a high-interest bond.

It is examining options including raising fresh equity or cheaper debt to refinance the 9.25 per cent paper, which it issued in 2013 in its first foray on to debt markets after its 2012 examinership.

A “non-call period” during which the expensive bond may not be redeemed expires at the beginning of summer.

Eir is then free to take out the debt, among the highest-yielding corporate bonds in Europe, provided it can raise the cash.

The company believes it has several options for refinancing the 9.25 per cent bond.

Separately, it may also need to raise further capital soon if successful in its bid for the State-subsidised National Broadband Plan for rural internet.

Future flotation

Market observers believe it likely that it will have to deal with both of these issues prior to any future flotation of the company. Eir is currently considering options including issuing fresh bonds at a cheaper rate, tapping shareholders for cash or signing up to a revolving credit facility. It could also raid its cash balances to part-fund its requirements.

It had €186 million in cash in December, according to a recent presentation.

The company last night confirmed it is looking to “optimise” its financing.

“The non-call period [on the bond] ends mid-May 2016 and we are exploring a number of refinancing options,” it said.

On its overall funding requirements, it said: “We have confidence across our various investor groups in support of our business plan.

“We also have significant cash on the balance sheet and we are cash-generative.

“As a result, we have numerous options available to us as to how we would finance the NBP [National Broadband Plan] if we win, and we believe we are in a very strong position to fund the NBP.”

Despite wrangling with the Government over its plan to overlap the broadband plan with its own fibre network, Eir is one of the favourites for the scheme along with ESB-Vodafone joint venture Siro.

E-Net may also mount a challenge for NBP.

The plan, which will see the State award two subsidised contracts later this year for rural broadband to an estimated 700,000 homes, will require total outlay of between €1 billion and €1.5 billion.

One funding option that Eir is said to be considering is tapping Anchorage Capital, the US hedge fund that is already effectively its controlling shareholder with a stake of about 40 per cent.

Anchorage is reputed to be the bidder who tried to take control of Eir last year in a deal that gave the group an enterprise value (debt and equity) of up to €3.3 billion.

Recent meetings

Anchorage executives were in Dublin on Friday of last week for a series of meetings with

Richard Moat

, Eir’s chief executive, and other senior members of its management.

The winning National Broadband Plan bidders will have to stump up their portion of the capital over several years, while the State will contribute the rest.