Esat BT, the second-biggest fixed-line telecommunications firm in the State, has paid €412.1 million to its bondholders to buy back bonds in a transaction backed by parent British Telecom.
The company on Thursday bought back its $160 million (€164 million) bond due in 2008 and its €179.9 million bond due in 2009.
British Telecom provided Esat BT with a loan to fund the bond transaction.
It is anticipated the bond buy-back will save Esat BT €21 million in annual interest payments, said Mr David Sams, international treasurer at British Telecom.
Both the dollar and euro bonds, which were issued before British Telecom's acquisition of a majority stake in Esat in 2000, were subject to annual interest payments of 11.875 per cent.
Low interest rates currently available make this level of annual payments uneconomic.
Esat BT paid interest of $6.1 million and €8.1 million on the bonds as part of the buy-back deal this week.
It is understood 99.7 per cent of dollar bondholders responded to the tender by Esat BT.
Some 98 per cent of euro bondholders responded to the tender.
As a majority of the bondholders agreed to amendments proposed to the covenants that governed the bonds, Esat BT will now not have to file documents with the Securities and Exchange Commission.
The amendments to the covenants should give Esat BT greater commercial and financial flexibility, according to Mr Sams.
Meanwhile, Esat BT said yesterday it had introduced its high-speed internet service in Cork, Kerry, Tralee and Galway. It will also shortly set up its digital subscriber line (DSL) service in Clonmel, Waterford and Dublin.
Esat BT's broadband service will now compete with Eircom's i-stream in Dublin.
Originally, it was only expected to introduce its DSL service in regions where it received Government grant aid.
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