Debt holders in Smart group set to write off about €50m in loans

DEBT HOLDERS in Smart Telecom are set to write off about €50 million in loans as part of the proposed takeover of the company by its Dundalk-based rival Digiweb.

Under the terms of the scheme proposed to creditors, Smart’s senior debt holders would only receive about €20 million of the €70 million they are owed.

This money would be payable at maturity of the original loans in 2014. No coupon would be paid on this sum in the meantime.

This money was loaned to Smart by a number of bondholders, including US groups Avenue Capital and Plainfield Asset Management.

Smart was rescued in 2006 by Cavan businessman Brendan Murtagh and his associate Tom Jones. The pair have provided personal guarantees for the loans provided by the bondholders and it remains to be seen if they will be pursued for this money.

Other creditors of the company are owed about €10 million. It is understood that these will be offered under 10 cent for every euro they are owed.

As part of the Smart rescue deal, it is understood that Digiweb will inject about €3 million into the business in working capital.

The scheme has been put together by Smart’s examiner, accountants McStay Luby. The deal will require the approval of creditors and the High Court.

McStay Luby has until December 8th to conclude the examinership.

One creditor, who asked not to be named, said the alternative to the current proposal for Smart was “liquidation”.

The merger of Smart and Digiweb will result in the creation of a company with annual revenues of €40 million and more than 150 staff. It will have 46,500 business, residential, corporate and Government customers.

In terms of trading, both companies are said to be operating on an “Ebitda positive” basis.

Digiweb’s chief executive Colm Piercy declined to comment on the rescue deal yesterday but released a statement on his company’s proposed takeover of Smart.

“We are excited about the possibilities of combining the Smart business with our own company.

“We see very strong advantages for the combined customer base, who would see a major upgrade in the range of services that they can access from a single truly national provider. Together we can grow strongly in business, consumer and public sector markets.

“This would make Digiweb Group one of the largest Irish owned telecommunications companies, and give us the network, people and managed services capability to provide real choice to the Irish market.”