Eircom applies for examinership

Eircom has applied for court protection to allow it to restructure its debt load.

A representative of the company told the High Court the firm was applying for examinership, a process that protects company assets from creditors for up to 100 days while a survival plan is worked on to keep the business afloat.

The examinership is the largest in Irish corporate history.

Under the proposals, Eircom’s gross debts would be reduced from about €4 billion currently to about €2.35 billion.

When cash resources are taken into account, Eircom’s net debt is about €3.6 billion currently.

Voting on the restructuring proposals concluded yesterday. A majority of first-lien senior lenders were expected to give their approval to the plan, which would result in a 15 per cent haircut being applied to their €2.7 billion debt.

The maturity profile on these borrowings would also be extended to 2017.

Second-lien lenders are due to receive a €35 million payment for their €350 million debt. A significant number of these lenders opposed this deal and the possibility exists that some or all of them might seek to challenge the examinership.

Another €1 billion is owed to payment-in-kind and floating-rate note loan-note holders, who are expected to be wiped out.

Additional reporting: Reuters