THE OWNERS of Smart Telecom are expected to seek the approval of the High Court on Monday to enter examinership, a move that would protect the debt-laden group from its creditors for up to 100 days.
It is understood the court be asked to appoint John McStay of McStay Luby examiner to the telecom company.
Smart is controlled by Cavan-based businessman and Kingspan shareholder Brendan Murtagh and his fellow investor Tom Jones.
In recent months Smart has relied on funding provided by bondholders, who are believed to have pumped several million euro into the company this year to help it continue trading.
Smart has undergone significant restructuring in 2009. This included 30 redundancies and a refocusing of its business model towards corporate and Government customers and away from residential.
This is believed to have allowed Smart to bring in more cash than it is spending and to become “Ebitda and cash positive”.
Nevetheless, Smart is heavily indebted and has been in breach of its banking covenants since 2007, according to accounts filed with the companies office here.
The accounts for Smart YuRoE Broadband Ltd also show that Smart’s lenders “could call for immediate repayment” of €47.9 million in debt.
The accounts indicate that Smart YuRoE owes its lenders €52.2 million in loans and accrued interest, with Mr Murtagh and Mr Jones providing personal guarantees for the repayment of this money.
The loans are owed to a group of bondholders, who comprise US institutions. The sum was originally due to be paid over five years to 2012.
Earlier this year, Mr Murtagh engaged London-based corporate adviser Collins Stewart to advise it on strategic options. This included seeking a buyer for the business, with reports suggesting that talks were held with rival Irish telcos Digiweb and Magnet.
It is understood that the owners want to address the debt issues on Smart’s balance sheet with a view to putting it on a firmer financial footing. This might ultimately involve a sale of Smart to another telco here.
Smart YuRoE Broadband made a loss for the year to the end of December 2007 of €8.8 million, largely due to a write-off on an intercompany debt.
It owed creditors €52.4 million at the end of the year. The company was owed €60.1 million by Smart Telecom Holdings Ltd, its main subsidiary.
Smart Telecom Holdings generated a loss of €19.6 million in 2007 and had net liabilities of €42 million. The 2007 accounts were qualified by auditors KPMG.
Smart was founded in 2000 by Oisín Fanning and was once listed in London. In 2006 its fixed-line services were cut off by Eircom.
