Two US hedge funds and Singapore's sovereign wealth fund are set to hold 90 per cent of the voting rights in Eir after they buy up another key investor's stake in the phone group.
It emerged during the week that New York hedge fund York Capital is planning to sell its 9.8 per cent equity stake in Eir to rivals Anchorage Capital and Davidson Kempner, as well as the Singapore government's GIC investment vehicle.
While the deal would see the equity interest of the three companies rise to 74 per cent, sources said their voting control of Eir would be 90 per cent. The group, formerly known as Eircom, is valued at about €3.5 billion, including debt.
A notification filed with the Competition and Consumer Protection Commission on Wednesday that Anchorage proposed to acquire "sole control" of Eir initially prompted speculation that the US firm was launching an outright bid.
However, sources said that as Anchorage, which owns 36.4 per cent of the equity, was buying part of the York holding, its voting rights would tip over the key 50 per cent threshold. Anchorage is believed to currently hold between 45 per cent and 49 per cent of the voting rights.
Eir’s shareholder base has evolved significantly since its senior creditors seized control of the group in 2012 as part a restructuring under the protection of examinership. This saw more than 45 per cent of its then €4.1 billion total debt being written off.
Bondholder documents show that in September 2013, Blackstone owned almost 25 per cent of the group, while asset managers that buy junk-rated and distressed debt, Alcentra Capital, Babson Capital and Silver Point Capital, owned 14 per cent between them. All four have subsequently disposed of their holdings, with Blackstone selling its stake to Anchorage last year.
It is understood that investors tweaked their shareholder agreement last year to allow for a company to buy more than 30 per cent of the group without triggering an automatic takeover requirement.
Anchorage’s imminent increase in its voting rights above the 50 per cent market means Eir will have had eight sets of controlling shareholders in the past 18 years, including the Irish State, which floated the business in 1999.
Eir posted its first annual growth in revenue in eight years in the 12 months to June. It has spent much of 2016 improving the profile of its €2.3 billion debt mountain.
It was planned in 2014 to carry out a third stock market flotation, but it was pulled at the last minute. Eir's chief executive Richard Moat signalled earlier this year it would be at least 2018 before it made another attempt.