EIsland may sell Golden Pages if it succeeds in taking over Eircom

Eisland could sell the Golden Pages directory business and move into broadcasting if it takes over Eircom.

The Corporate Governance Termsheet put to the Eircom Employee Share Ownership Trust by eIsland allows it to take both courses of action without the consent of the ESOT, according to the ballot documentation sent to ESOT members last week.

The document contains details of the two competing offers for Eircom from eIsland - which is led by Mr Denis O'Brien - and Valentia, chaired by Sir Anthony O'Reilly.

The documents include the Corporate Governance Termsheet that has been offered by eIsland to the ESOT.

The terms include a veto on significant disposals, with the exception of the Golden Pages, which indicates that eIsland may seek to sell the classified telephone directory company to pay down some of the debt it will incur during the takeover.

The Golden Pages, which is a joint venture with Promedia, has sales of around £45 million (€57 million) and at one stage was valued at €250 million by the company - which planned to float it off along with its multimedia assets.

Eircom owns 63 per cent of Golden Pages.

Similarly, the consortium has said that it will not fundamentally alter the business, with the caveat that eIsland can "engage in the transmission of broadcasting services".

This is also taken as an indication that eIsland plans to move Eircom in that direction, should its bid succeed.

Valentia has no plans to sell the Golden Pages, according to sources close to the consortium.

EIsland has also offered the ESOT a number of other guarantees, including vetoes over changes to the constitutional documents and the giving of guarantees and or indemnities.

It would also be allowed block any transactions between eIsland and Mr O'Brien, which were not on an arm's length commercial basis.

Despite the extensive corporate governance guarantees that eIsland has offered, the ESOT remains firmly behind the Valentia offer.

The trustees believe that offer has a higher degree of contractual certainty and is more likely to succeed - as it has the support of shareholders controlling 53 per cent of the company.

Although the two offers are within 0.5 cents of each other - and value the company at €3 billion - the ESOT's advisers have concluded that the eIsland offer has a greater degree of risk.

The ESOT trustees have recommended that their members vote for the Valentia offer. The result of the ballot will be known on August 27th.