Still no clarity on what will become of telecoms firm down the line

ANALYSIS:Come what may from the debt restructuring process, the business will survive. It just might have a different look, a new name and another owner

AFTER MONTHS of planning, painstaking discussions with workers, shareholders and lenders, and elements of bluff and counter bluff, Eircom’s management and directors are still no closer to providing clarity on the company’s future.

For now, it’s business as usual. Whatever the outcome of this tortuous “debt remediation” process, consumers can rest assured they won’t wake up one morning to find that their phones and broadband have been cut off.

Come what may from this process, the business will survive. It just might have a different look, a new name and another owner.

STT’s decision not to meet the extended deadline – the original one was November 18th – for tabling a proposal was not a shock. The mood music from Singapore this week suggested that STT’s hierarchy were spooked by the euro zone crisis.

It’s hard to blame them. Then again, the euro crisis has hardly crept up on us.

Just three weeks ago, Terry Clontz, a senior STT executive and Eircom board member, was briefing journalists in Dublin to the effect that it was frustrated by how long the whole restructuring process was taking. It had tabled its initial proposal in August.

Clontz made it clear that STT was committed to Eircom, saying the delay in agreeing a speedy outcome to the debt restructuring would only further damage the company’s ability to compete.

Just days later, STT sought an extension to the deadline set by Eircom’s independent directors and it has now decided to do nothing. Very odd.

It has been suggested that the employee share-ownership trust (Esot), which owns 35 per cent of Eircom, was kept in the dark as to STT’s intentions over the past fortnight. They were supposed to be formulating a joint proposal.

Admittedly, STT yesterday left the door ajar to re-entering the process. It might simply be playing hardball with first-lien lenders to get a better deal.

Originally, STT had proposed investing $300 million (€224 million) with the Esot. First-lien lenders would have been given a 20 per cent equity stake while writing off only 8 per cent of their $2.4 billion debt. Other lenders would be left swinging.

By holding back, STT might get a better outcome and its ace card is the fact that Eircom’s management clearly wants it on board as a strategic investor.

Having a bunch of bondholders as owners would be a nightmare.

This is the scenario facing Eircom. Meanwhile, its competitors continue to eat into its market share. It’s time for the bluffing to end.