Yates calls for apology over Eircom sale pricing

The Taoiseach rejected a Fine Gael demand for a special debate on the pricing of Eircom shares.

Mr Ahern was responding to what the Fine Gael spokesman on public enterprise, Mr Ivan Yates, described as the "startling admission" earlier by the chief executive of Eircom, Mr Alfie Kane, that the company knew the flotation share price was overvalued by 30 per cent. Mr Ahern said the prospectus and the price range, set prior to the flotation, were agreed by the Government and the company.

Mr Yates demanded that the Minister for Public Enterprise, Mrs O'Rourke, should confirm that she was aware of the view within the company, and disclose when she became aware that KPN and Telia were going to sell the shares after six months from the day of the flotation. The Government, he said, should apologise to the hundreds of thousands of shareholders who were now facing the prospect of considerable losses.

Demanding a debate, the party leader, Mr John Bruton, said there was a need to have people willing to invest in shares as part of the preparation for their own retirement and the accumulation of savings in productive business. A debate could allay "the mess", which had done a great deal of damage.

Mr Ahern said there could not be a debate in the House every time share prices went up and down. There were prudential rules which had to be followed in floatations. "In this case, the company had both international and domestic advisers. The decision was based on advice, which cost about £28 million to secure."

Mr Yates said: "What Mr Kane said this morning was not known to the public when they bought the shares." Mr Ahern replied: "I heard what Mr Kane said this morning, but he was chief executive of a company that agreed at the time."

Earlier, Mr Ahern said the balance sheet of the company at the time of the flotation was very strong. "The price set by the Government for Eircom at the flotation was set on the basis of what the market was prepared to pay. The strategic partners in Eircom were prevented from selling their shares in the company for up to six months. The position was made clear in both the main prospectus and the mini-prospectus.

"The pricing of the shares in July 1999 was a delicate one, balancing the need for a fair price for the taxpayers and a fair return for retail and institutional investors. The Government could have chosen to float the company at a higher price than it did, but chose not to do so. The joint global co-ordinators at the time wanted us to float it at €3.27."

Mr Ahern said that bonus shares of one for every 25 shares held would be issued to people who retained their shares after July. This was equivalent to 4 per cent interest.