Eircom rejects €3.3bn bid as US investor builds stake

The ownership of Eircom is back up for grabs after it rejected a "credible" offer of up to €3.3 billion, while its biggest shareholder has also sold a quarter of the group to Anchorage Capital, a US investment house.

Anchorage, which has global operations and is headquartered in New York, did not comment when asked if it was the “credible” bidder referred to by Eircom. Eircom also declined to comment.

Offer too low

Eircom told the stock exchange on Tuesday evening that it rejected the offer as being too low. It is understood that the offer came in the first three months of this year, and the telco said the issue is “not being progressed”.

“[It was] a non-binding expression of interest in roup for an aggregate price in the range of €3.2 billion to €3.3 billion,” said Eircom. “While the bidder was very credible, the board believed that, with the business reaching an inflection point, the indicated price range undervalued the group.”

Anchorage, which until recently held a stake of about 8 per cent in Eircom, has bought a further 25 per cent of the business from Blackstone’s GSO unit in recent days, according to several sources.

GSO has retained about 5 per cent of Eircom, having held about 30 per cent prior to the Anchorage deal.

Anchorage, which was an underbidder for Siteserv and is clearly hungry for Irish assets, is now far and away the largest shareholder in Eircom. It has a stake in excess of 30 per cent, putting it in a commanding position should a takeover battle commence.

Eircom also would not say whether the bidder it turned down was a trade buyer or a financial firm. It did, however, confirm that Anchorage is now the largest shareholder in the group.

Anchorage, which invests in assets requiring turnaround, has previously run the rule over assets being sold by Nama as well as Anglo Irish Bank bonds.

Eircom, however, said this week the telco group feels it has has reached an “inflection point”, indicating that management believe that most of the restructuring has been done.

Chief executive Richard Moat said Eircom would return to topline revenue growth this quarter, for the first time in seven years.

He told The Irish Times that revenue growth would bring it "one step closer" to a renewed attempt to float the business.

No flotation

Eircom was planning an IPO last year, but pulled it in September after market sentiment turned against flotations of certain companies.

It was rumoured, however, that Eircom’s preferred option all along may have been a clean sale to a single buyer.

Wednesday this week is also the deadline for a request by Eircom to its lenders, most of whom are also shareholders following its 2012 examinership, to extend the repayment date for its loans.

Eircom has made an “amend and extend” request to push the repayment date on about €2 billion of loans to 2022.