COMMUNICORP, the parent of Esat Telecom, is seeking to raise £30 million in debt to fund its share of the £100 million cost of launching the second mobile phone network.
The company is hoping to raise the bulk of the money in the US and its chief executive, Mr Denis O'Brien, is understood to have been making presentations to US investors over the last two weeks.
Communicorp is a 37.5 per cent shareholder in the Winner of the second licence, Esat Digifone, through its holding in Esat Telecom.
The Norwegian state phone company Telenor owns another 7.5 per cent while Mr Dermot Desmond's company, International Investment and Underwriting, holds the remaining 25 per cent.
Under the terms of the planned fund-raising, Communicorp will be reorganised. A new company, Esat Holdings, will be created as the holding company for Esat Telecom and for the group's stake in Esat Digifone.
Communicorp's other interests, including the Dublin radio station 98FM and radio stations in Prague and Stockholm, will be held separately.
Esat Holdings will be 88 per cent owned by Commuricorp and 12 per cent by outside investors on Esat's board, including the former Secretary of the Department of the Taoiseach, Mr Padraig O hUiginn, the former senior partner of KPMG/Stokes Kennedy Crowley, Mr John Callaghan, and the management consultant Mr Leslie Buckley.
Communicorp is 65 per cent owned by Mr O'Brien and 35 per cent by the US venture capital company Advent.
The £30 million in debt will be raised through Esat Holdings and will mainly be used to fund its share of the cost of starting up the new network. However, some on the money may be used to fund Esat Telecom's planned expansion. It is understood that Esat Holdings wants to raise the £30 million through loan notes. The notes will be split into £15 million of loan notes with convertible stock warrants and £15 million convertible into second preference shares. The US bank, CS First Boston, is advising the company.
A spokeswoman for Esat Digifone said last night the project would be financed through a mixture of equity put up by the consortium members and debt raised by Esat Digifone itself The equity finance was committed and underwritten she said
AIB and ABN Amro banks were organising the debt portion and had already committed £25 million in bridging finance at this stage, she said.
Esat Digifone won the competition to operate the second mobile phone system in October last year. However, the company has not yet been officially awarded the licence. The Department of Transport, Energy and Communications said yesterday that the negotiations were at an advanced stage.
Esat Digifone plans to spend £100 million over the next five-years developing its network. The investment will include an up front payment of a £15 million licence fee to the Government.
