Eircom appoints Goldman Sachs to advise on sale

EIRCOM HAS appointed investment bank Goldman Sachs to advise it on bids for the telecoms group by its listed Sydney-based parent group.

The appointment of the London firm was made in recent days by the board of Eircom in Ireland.

Eircom has been put up for sale by Australian-listed fund Eircom Holdings, which owns 57 per cent of the Irish telecoms business and was formerly known as Babcock Brown Capital.

The Sydney-based group recently appointed UBS to find a buyer for the Irish telecoms group.

A handful of bidders have emerged in recent weeks with potential offers. These include financier and former Babcock Brown executive Rob Topfer, who has tabled an offer of Aus$175 million (€100 million). Mr Topfer’s bid, made through an investment vehicle called TaemasBridge, has been rejected by the Eircom employee share ownership trust (Esot) and trade unions.

Singapore Technologies Telemedia is also believed to have held meetings with the Government and Esot, which owns 35 per cent of the company, in recent weeks with a view to making a bid for the Irish group.

Private equity groups Arcapita and CVC are also believed to be conducting due diligence while Irish entrepreneur Seán Melly is lining up a potential bid, with financing from JP Morgan.

Deleveraging Eircom’s balance sheet will be a key component of any successful takeover of Ireland’s biggest fixed-line operator. The company has debts of close to €4 billion.

Eircom has indicated that its debt is too high and it could default on loans if action is not taken. It recently agreed a deal with its trade unions aimed at saving €130 million a year.

The company’s restructuring plan involves 1,200 voluntary job losses and pay cuts of up to 10 per cent. The firm recently appointed former Vodafone executive Paul Donovan as its new chief executive and he will assume the post next month.