Eircom’s shareholders, Singapore investment fund ST Telemedia and the employee Esot, have failed to submit a proposal to tackle the company’s €3.7 billion net debt by today’s deadline set by the telecoms group’s independent directors.
In a statement from Eircom, the independent directors said two proposals had been received – one from a group of first lien senior lenders, who are owed about €2.4 billion, and a proposal from a group of second lien senior lenders, which Eircom owes about €1.3 billion.
It is understood that ST Telemedia has become increasingly concerned about the euro zone debt crisis.
The First Lien Co-ordinating Committee (FLCC) is understood to have been working on a proposal that would involve it taking 100 per cent of Eircom's equity in return for a debt write-down of 7-9 per cent. The maturity of the debt would also be extended to September 2017, but there would be no cash payment to the lenders.
As a result, Eircom could access nearly €400 million in capital on its balance sheet to invest in its network.
The independent directors said they will evaluate the two proposals and submit a report to the full board of Eircom group. The board will then hold discussions with the FLCC to seek agreement on a course of action.
"While the current shareholders have not yet submitted a proposal the Independent Directors and Management will continue to encourage both shareholders to do so," said Paul Donovan, Eircom chief executive.
Eircom's board has also requested its senior lenders extend a covenant waiver until January 31st, 2012.
