THE PARENT company of debt-laden Eircom has confirmed it has hired Morgan Stanley & Co International to seek a buyer for the company.
“Receipt of non-binding expressions of interest from interested parties will be due in mid-March 2012,” a statement for ERC Ireland Holdings Ltd said yesterday.
Eircom was the subject of an informal sale process last year, which resulted in Denis O’Brien’s Digicel mobile phone group expressing an interest. Mr O’Brien later withdrew from the process.
Before Christmas ST Telemedia, Eircom’s Singapore-based majority shareholder, withdrew a €200 million conditional investment proposal due to concerns over the euro crisis. It also withdrew its executives from the Eircom board and other committees. No comment was available from STT last night.
The board of Eircom does have two investment proposals on the table – one from first lien lenders, owed about €2.6 billion, and another from second-lien senior bondholders.
The first lien proposal involves the lenders taking full control of the business, accepting a haircut on their debt, and extending the maturity of the loans out to 2017 from 2014. The second lien bondholders are prepared to write down €250 million of its €350 million debt in exchange for a €100 million debt instrument that would rank in line with the first lien lenders, who are firmly at the head of the queue to have their debts repaid. They also want an equity stake of 4 or 5 per cent.
“The company continues to consider and discuss the proposals received from the co-ordinating committee of the first lien senior lenders and a grouping of the second lien senior lenders, and will consider any expressions of interest received under the sales process as additional options for the balance sheet remediation process,” said ERC’s statement.
It is not clear who might step forward at this late hour with an investment proposal for Eircom. Some sources believe this process is simply another step along the route to either examinership or administration for the telco.
It is believed Eircom’s management has revised the company’s business plan. This is expected to be shared with lenders shortly.
