Eir bondholders waive right to early repayment of €700m

Eir bondholders have waived their right to an early repayment of €700 million that they are owed as the phone group goes through its seventh change in ownership in less than two decades.

It comes as debt investors continue to struggle to find high-yielding assets amid ongoing stimulus policies by monetary authorities globally, including the European Central Bank, that have left bond yields near record lows.

The Eir bonds, due to mature in 2022 and graded “junk” or below investment grade by leading debt-ratings firms, were issued in 2016 and initially priced to carry an interest rate, or coupon, of 4.5 per cent. They are currently yielding 3.6 per cent in the market at a time when similar-duration Irish Government bonds are carrying a rate in the market of less than zero.

A plan by two companies controlled by French telecoms billionaire Xavier Niel to acquire a 64.5 per cent stake, announced last month, would ordinarily trigger an early repayment of the bonds.

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Eir said on Monday that it was looking for bondholders to waive this right, giving them a Friday 4pm deadline. However, a majority of the investors had already consented by early Thursday, meaning the waiver was enforceable on all. Only those that actively consented, however, are entitled to a special one-off payment of €1.50 for every €1,000 they are owed.

Clearance

Meanwhile, sources said that the companies controlled by Mr Niel, NJJ Capital and Paris-listed Iliad, made a filing with the European Commission this week seeking clearance to proceed with the takeover, which values Eir at €3.5 billion. The company has been through a series of ownership changes since the Government floated it, then under the name Telecom Éireann, in 1999.

The latest deal will also require approval from the Minister for Communications, Denis Naughten, and the Broadcasting Authority of Ireland.

The Irish Times first reported in September that Mr Niel, who founded France's first internet services provider in 1993 before selling it on the eve of the bursting of the dotcom bubble in 2000, was circling. It also reported the terms of the final agreement last month, before they were confirmed by the parties involved.

The deal involves 45 senior staff at Eir sharing €100 million in exchange for their shares in the company, according to sources, and the planned exit of Richard Moat, group chief executive for the last three years.

Current Eir shareholders US hedge funds Anchorage Capital and Davidson Kempner Capital will also remain on board, although Singaporean sovereign wealth fund GIC, which built up a 20.6 per cent stake last year, is exiting.

The value of the transaction is being put at €3.5 billion, including Eir’s €2.1 billion of net debt. This places an equity value on the business of €1.4 billion.