Eircom directors received extra payment of €508,000 for work on Valentia deal

 

Eircom directors have been paid a total of £400,000 (€507,895) in addition to their normal fees for the extra work involved in selling the company to the Valentia consortium.

The size of the extra payments to directors varied between £100,000 paid to chairman Mr Ray MacSharry on top of his fee of £110,000 as chairman of the company, and £30,000 paid to the non-executive directors. These payments were in addition to the annual fees of £38,000-£41,000 paid to each Eircom non-executive director.

The payments, approved by the takeover panel, were made about 10 days ago when the Eircom directors stepped down to facilitate the takeover of the company by Valentia. A Valentia spokesman yesterday dismissed weekend reports that Eircom consumers and employees would suffer because of a poor take-up by sub-underwriters of the consortium's syndicated €2.4 billion (£1.89 billion) loan paper.

"The deal (to raise the loan finance) has been done. It is completed and in place. There are no problems whatsoever. There have been no changes in the terms or the structure of the loans," he said.

Some of the smaller banks in the sub-underwriting arrangements decided not to take up the loans, but all the leading banks have taken up the amounts agreed at the interest rates and repayments terms agreed, an Eircom spokesman commented.

On the additional payments to Eircom directors, the spokesman said they reflected the extra work done by directors in the last year. Some directors were required to attend up to 60 meetings during the year, compared with the normal level of about eight board meetings, he said.

Details of the payments were not disclosed to shareholders in the Valentia offer documentation because they were agreed subsequent to that document, he said.

Eircom deputy chairman Mr Jim Flavin received £75,000 in addition to his annual fee of £78,000, while director Mr Pat Mulloy got £50,000 in addition to his annual payment of £41,000. In the sale to Valentia, Eircom shareholders received a total of €1.365 per share.

When the Vodafone shares they received on the sale of Eircell are taken into account, Eircom shareholders who bought in at the €3.90 flotation price have lost just under one third of their original investment.