EIRCOM OWNER Babcock & Brown Capital (BCM) has brushed off an unsolicited takeover approach for the telco from its former management as “unacceptable in its current form”.
In an implicit attempt to partially block the proposal from former BCM director Rob Topfer and involving former Eircom chief executive Rex Comb, the fund yesterday pledged to return most of its remaining cash to shareholders if no buyer emerges in the next two months.
BCM would pay 80 Australian cent (43.9 euro cent) to investors to return A$135 million to them, leaving a “prudential reserve” of A$40 million within the fund. The fund’s shares closed at 97 Australian cent on the Sydney stock market last night.
While such a return of cash by BCM would all but eliminate the reserves Mr Topfer planned to return to shareholders under his A$1.05 per share proposal, he would have to cut his bid price as a result. With BCM shares trading around 80 Australian cent before the approach emerged, such a manoeuvre would lessen Mr Topfer’s prospects of success.
This, together with the publication of Mr Topfer’s proposal on BCM’s website last week, is seen as an effort to weaken his position.
In a letter to shareholders yesterday, BCM chairman Kerry Roxburgh said Mr Topfer’s approach was but one of “several” proposals before the board at present.
Eircom’s board and its current management have set themselves against the approach from Mr Topfer, the driving force behind the takeover of Eircom in 2006 by the fund’s immediate parent, the now-bankrupt investment bank Babcock Brown.
BCM owns 57 per cent of Eircom, and the Eircom employee share ownership trust (Esot) owns 35 per cent of the business.
It is acknowledged by sources in Dublin that the telco itself will have little influence over its fate. In the driving seat will be BCM shareholders, who are nursing heavy losses on their investment in a fund whose stock has lost more than half its value in 12 months.
Mr Roxburgh said each of the takeover proposals before the board is non-binding and incomplete. “These proposals are from international financial and strategic groups, and a number of these groups have been invited to conduct further due diligence on Eircom and BCM.”
The identity of the other groups or the strength of their proposals is not yet known.
