STT asks Sullivan to stay on as chairman of Eircom

SINGAPORE Technologies Telemedia (STT) has asked Ned Sullivan to remain on as chairman of Eircom following its takeover of the business earlier this month.

Meanwhile, ratings agency Standard Poor’s (SP) has placed Eircom on credit watch with “negative implications” and warned of a possible breach of covenants in the next 12 months on its €4 billion debt. Eircom has a “B” rating.

Mr Sullivan will chair a board of about six, which will include two representatives of the employee Esot and two STT members.

The composition of the board is expected to be announced today.

It is understood that the Esot will be represented by its chairman Jerome Barrett and Greg Sparks, an accountant and adviser to the share trust.

STT’s two members are likely to include Terry Clontz, who this month stepped down as chief executive of StarHub, STT’s mobile subsidiary in Singapore.

Mr Clontz, an American, will be based in Dublin as STT’s “eyes and ear”, according to sources who said he would effectively act as chief operating officer.

Eircom chief executive Paul Donovan will also sit on Eircom’s board.

Mr Sullivan, who was a director of Anglo Irish Bank before its collapse, travelled to Singapore last week with Mr Donovan to meet with STT.

STT executives are in Dublin this week and will be meeting Minister for Communications Eamon Ryan and regulator Comreg.

SP, meanwhile, raised concerns yesterday about Eircom’s level of debt and STT’s future strategy for the Irish company.

“The rating action reflects our opinion that various financial covenants present in ERCIF’s [Eircom] senior secured facilities could be breached over the coming three to four quarters,” SP analyst Xavier Buffon said.

“We think that the range of feasible measures to address this situation could be narrowed, and the risk of breach increased, by the current challenging combination of ongoing revenue pressures, tough competition and regulatory scrutiny, restructuring measures and fixed outlays required to preserve operating margins and market positions, and possible future cash contributions to fund the pension deficit.”

SP said it was “uncertain” about “the future orientation of strategy and financial policy to be set” by STT and would seek information from management regarding what “possible measures” it might take to address any covenant breach”. It warned it could lower its rating.