Members of Eircom's employee trust will receive up to #10,000 (£7,876) each in Vodafone shares next month following its acquisition of Eircell.
The effective payment to 13,500 staff and former staff is the first following the break-up of the former State monopoly. The sale of the balance of the company to a consortium led by Sir Anthony O'Reilly was backed by its board on Monday.
It is thought the employee share option trust (ESOT) will receive about #410 million under the terms of the leveraged buy-out of the balance of Eircom, which values Eircom at up to #1.32 per share in cash and warrants.
A spokesman declined to comment when asked what stake Sir Anthony or other investors held in the Valentia consortium.
Sir Anthony is chairman of Independent News & Media, publisher of the Irish Independent, which yesterday reported he would hold about 4 per cent of Eircom when the #2.88 billion deal was complete.
As the group now in exclusive negotiations with Eircom, Valentia will be obliged to notify either the Tanaiste, Ms Harney, of the competition directorate of the European Commission of the proposed take-over. Notification to Europe would normally over-ride the State process.
It would be open to Ms Harney to refer the deal to the Competition Authority if she believed it could hinder competition. However, observers believe the scale of the take-over means Valentia will be more likely to refer the acquisition to the competition commissioner, Mr Mario Monti. His office sanctioned BT's purchase of Esat in 2000 and found in favour last March of Vodafone's acquisition of Eircell.
A spokeswoman said the Office of the Director of Telecommunications Regulation had "no formal role" to regulate the cross-ownership of shares in telecoms and cable companies. Independent News & Media owns 50 per cent of Chorus, a television relay firm.
She said the sale by Eircom in 1998 of its stake in Cablelink had been requested by the Government, not the regulator, Ms Etain Doyle. That request followed an EU directive which had not been transposed into Irish law.
She added that Ms Doyle's approval was not required to facilitate the transfer of Eircom's telephony licence to Valentia. However, the new company would be required to disclose information about the business, such as separated accounts.
The ESOT at Eircom gained shares worth about #500 million in the Vodafone transaction. It is understood up to #100 million of those shares will be dispersed to ESOT members next month.
It is also likely that an additional #60 million in proceeds from the sale of the trust's 14.9 per cent stake in Eircom will be used to clear more than half of the ESOT's #110 million debt.
The remaining #350 million will be used to pay for its stake in the new company. This sum is added to an up-front payment of about #450 million from the Valentia partners, which makes an effective deposit of #800 million for Eircom. The remaining #2 billion will be funded with debt drawn by Valentia.
In addition to Sir Anthony, its members include the US investment bank, Goldman Sachs, US private equity firms Providence Equity Partners and Warburg Pincus, and Soros Private Equity Partners, owned by the financier Mr George Soros.
The ESOT will acquire about 29 per cent of the business in preference and ordinary shares and about 1.6 per cent in warrants. It will have 25 per cent of voting rights on the board of the new entity.
The chairman of eIsland, whose bid for Eircom was rejected, yesterday claimed Eircom directors had "disenfranchised" shareholders by accepting the Valentia bid. After his appearance at the Moriarty tribunal, Mr Denis O'Brien accepted his role was "probably" passive now.
Mr O'Brien claimed eIsland's final bid was "about six cents" stronger than Valentia's, when the value of non-guaranteed warrants was taken into account.
