EIRCOM WILL seek to reduce its headcount by 1,000 over a five-year period up to mid-2017 as part of a wide-ranging plan to put the heavily indebted company on a sounder financial footing, the High Court was told yesterday.
As part of its petition for the appointment of an interim examiner to co-ordinate a restructuring of its gross €4.1 billion debt, Maurice Collins, for Eircom, said a five-year business plan drawn up by management also involved a €1.3 billion investment in its network.
It is proposed that Michael McAteer of Grant Thornton be appointed as interim examiner. Mr Collins outlined how the restructuring would leave Eircom with debts of about €2.34 billion. He said 80 per cent of first lien lenders had agreed to a haircut of €407 million on their €2.695 billion debts.
A majority of second lien lenders had also consented to their €350 million debts being reduced to €35 million - a 90 per cent cut. About €1.05 billion is owed to two categories of loan note holders who face being wiped out.
Mr Collins said there were a number of “unusual features” to the proposed examinership.
He said the debts of the company were “too heavy for the group to bear” and the situation had come to a head in June 2011 when it breached its banking covenants.
Trading is “positive” in general terms but had deteriorated in 2011. Mobile division Meteor made a loss last year, he added.
Since then, he said management and the company’s board had “responsibly and carefully engaged” with its lenders and shareholders to find a remedy to its financial difficulties.
Mr Collins said Eircom was “up to date with all trade creditors”.
“The companies propose that arrears [accumulated] in the ordinary course of business would be discharged.”
Mr Collins said Eircom was “clearly insolvent” but added that the proposed restructuring gave the company a chance of operating successfully into the future.
“One can say with more than usual confidence that the companies have a reasonable prospect of survival as a going concern.”
Mr Justice Peter Kelly asked about the position of employees. Mr Collins said it was the company’s desire to achieve the job cuts through voluntary severance.
