Eircom seeks go-ahead to spend €500m and to sell Temple Bar site
Telecoms group wants covenants limiting its indebtedness significantly relaxed
Eircom is seeking permission from its lenders to potentially sell its telephone exchange site on Crown Alley in Dublin. Photograph: Eric Luke
Eircom is seeking permission from its lenders to be able to spend up to €500 million on acquisitions and potentially sell its valuable telephone exchange site on Crown Alley in Temple Bar. The telecoms group also wants the covenants limiting its overall indebtedness and related interest payments significantly relaxed.
“The proposed covenant amendments reflect the current success eircom is enjoying with new products/ services as well as the accelerated rollout of the network and benefit anticipated from certain significant investment opportunities currently present across Ireland, ” according to documentation prepared for the company’s lenders.
The owner of the Meteor mobile phone network is also seeking to extend the term of the borrowings. The bulk of the company’s €2,227 billion of debt – which were renegotiated as part of an examinership process in 2012 – is in the form of a €1.913 billion term loan which is due to mature in 2019.
Holders of this loan are being asked to roll it over into a new loan maturing in 2022 while paying the same rate of interest, 4.5 per cent. Holders of another term loan of €108 million that matures in 2017 and which carries an interest rate of 3 per cent will also be asked to roll it over into the new loan.
The company may also try and raise additional borrowing as part of the process.
“The eircom management team has continued to make considerable progress within the business in terms of stabilising revenue, investing for future growth that is starting to be seen and significant cost savings (with more to come),” according to the documents.
“Since our last presentation to lenders, in which we discussed the performance through to 31 December 2014, the business has continued to perform in line with management’s expectations delivering strong revenue and EBITDA performance at the start of 2015 with the impact of price increases announced in Jan-15 still to be seen,” it adds.
The various proposed changes will require between 67 per cent and 100 per cent consent from the lenders with a deadline of May 20th set for their responses.