Eircom staff to benefit from share option sale

Christmas is set to come early for more than 12,000 past and present Eircom staff, who will get around €5,000 each from the sale of shares in the company.

The telecom company's employee share option trust (ESOT), which holds equities on behalf of its employee share option plan (ESOP), sold 30 million shares for over €50 million or €1.655 each yesterday.

As a result, the 12,000-plus members of the ESOP will get the proceeds.

The average amount paid to each will come to just under €5,000.

However, those who joined the company before it first floated in 1999 and remained long enough to receive each of the 11 share tranches that the company allocated to workers will get a maximum of €5,500.

Once they do not get more than €12,700 each in any given year, the members do not have to pay capital gains tax (CGT) on the profits they make from selling their shares.

When the company floated for the second time in March, the ESOP members shared a €66 million windfall.

As the two payments combined do not amount to more than €12,700, the ESOP members will not pay tax on these gains.

The sale brings to €318 million the total amount of shares and cash distributed to ESOP members since 1999.

Yesterday's sale amounted to just over 4 per cent of the company.

It reduced the ESOP's stake in Eircom to 24.7 per cent.

As long as the ESOP maintains more than 10 per cent of the company, it is entitled to representation on the board.

The sale was not connected with financier Mr George Soros' decision to sell 14.6 million shares for €24 million earlier this week. The ESOT had been planning the deal for some time and had distributed the forms needed to get the members' permission over two weeks ago.

The ESOP has to be wound up and the proceeds distributed to members by 2014.

The ESOT, the plan's trustee, intends to distribute the shares in tranches that do not result in any CGT liabilities for the members. Around 6,000 of the members no longer work for Eircom.

Dublin firm Goodbody Stockbrokers (Eircom's broker) and Goldman Sachs International, split the sale equally between them.

ABN AMRO Rothschild acted for the ESOT.

The offer was twice oversubscribed at €1.66, the top end of the price range in which the ESOT intended to sell.

Financial institutions, mainly from the UK, bought the stock.

It is understood no hedge funds took up the offer.