Eircom’s Singapore-based shareholder ST Telemedia has withdrawn its debt restructuring proposal and resigned its representatives from the various boards and committees of the group’s companies.
This move follows the decision last week by first-lien lenders to the company, who are owed about €2.6 billion, to reject STT's latest proposal to restructure Eircom's €3.7 billion net debt.
The board of Eircom said it would now proceed with "detailed discussions" with the first-lien co-ordinating committee (FLC) regarding its proposal to restructure the company's balance sheet.
Eircom chairman Ned Sullivan said there now existed an "environment of certainty for all the parties to move forward with the restructuring process".
In a statement issued this morning, STT's senior executive vice president for North America and EuropeTerry Clontz said the company was "disappointed" that the lenders "did not engage" on its second proposal to restructure Eircom's debts.
"STT put forward its first proposal to the FLC [first-lien co-ordinating committee] in early August 2011. Until November 2011, STT tried to actively engage the FLC for a speedy conclusion to the shareholder proposal.
"Within this period, despite an increasingly worsening macro-economic situation in the euro zone, STT improved upon its August 2011 proposal in an effort to conclude a debt restructuring package with the FLC in an expedited manner.
"A failure to reach any conclusion with the FLC on STT's improved proposal, and an acceleration in the deteriorating macro-economic euro zone fundamentals, led to STT to withdraw its first proposal."
On December 12th, STT submitted a revised proposal that included an equity injection of €200 million, paid in two equal instalments over a one-year period.
However, STT inserted a clause that would have seen them repaid the initial €100 million if Ireland had left the euro zone within a year of the payment being made.
STT also proposed to take a 75 per cent shareholder, offering the lenders 25 per cent. In addition, the lenders would have taken a haircut on their debts.
STT's revised offer was quickly rejected by the lenders.
Mr Clontz said the revised proposal "aimed to give Eircom the best opportunity to be competitive and viable over the long term as well as maintaining some financial flexibility in the current challenging environment".
He said STT was "disappointed" that the lenders did not engage with it on its second offer.
Mr Clontz said STT was "greatly appreciative" of the efforts of the directors, management, unions and employees of Eircom as well as its co-shareholders, the employee Esot, in "constructively working together" over the past two years.
STT's three representatives on the main board of Eircom have resigned their positions. These are Tan Guong Ching, Lee Theng Kiat, and Mr Clontz.
STT currently holds a 65 per cent stake in Eircom with the Esot owning 35 per cent. They took control of the business in January 2010 from former owners, Babcock & Brown.
