Eircom considering its third market flotation in 15 years

Company would be valued at upwards of €2.6 billion


Eircom has hired investment bank Rothschild to advise it on its strategic options, including a possible flotation of the company, which industry sources speculate would value it at more than €2.6 billion.

The company said last night it was “exploring a number of options with a view to further strengthening the financial position of the group. These options include a possible listing on a public market.”

It is understood that Eircom this week held a “beauty parade” in London for institutions pitching to work alongside Rothschild on a flotation, or possibly a trade sale.

The company is owned by a consortium of about 200 lenders, led by Blackstone, which controls about a quarter of Eircom.

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The banks seized control of Eircom in 2012 following an examinership that reduced its debt from about €4.1 billion. Hutchison Whampoa, the owner of Three mobile, failed with a bid of about €2 billion for Eircom as part of that process.

Eircom now has debts of about €2.2 billion, and it recently negotiated an extension of some of these loans, pushing out the maturity of the senior notes from 2017 to 2019, in what it called an “amend and extend” process.


'More sustainable'
"Improving the group's debt maturity profile has been a key milestone in securing a more sustainable and flexible capital structure for Eircom," the company said last night.

Following the recent “amend and extend” process, it emerged that Eircom’s debt would stay in place in the event of a listing of the company.

Eircom’s owners and lenders in recent weeks voted to abolish a “staple” of the company’s debt and equity, which had meant that its shares could only be traded in conjunction with its debt. The abolition of the staple opened the door for a nascent grey market in Eircom shares to spring up.

The debt held by the lenders who own the company has been trading in recent weeks at about 130 cent in the euro. This would imply that the market considers Eircom to be worth about €2.6 billion.

Industry sources said the company had other bond debts of more than €300 million and a similar amount of cash, and these would cancel each other out when calculating a potential valuation for the business.

Other sources speculated that Eircom might consider floating in both London and Dublin. It was also suggested that the company’s owner-lenders could be tempted to offload Eircom in a quick-fire trade sale, before plans for a flotation advanced significantly.

If Eircom does choose to float on the stock exchange, it will the third time it has done so in 15 years, following the controversial 1999 privatisation of the State-owned Telecom Éireann. It was later taken private by Sir Anthony O’Reilly’s Valentia consortium, which brought it back to the market in 2004.

Mark Paul

Mark Paul

Mark Paul is Business Affairs Correspondent of The Irish Times. He also writes the Caveat column