Divisions among members of the Eircom board over the company's future have crystallised in recent days, with the original large margin firmly in favour of a sale now shrinking to just one member ahead of last night's crucial board meeting.
Five of the company's 11 directors are now believed to be opposed to its sale or at best neutral on the issue.
The six in favour of securing a sale are understood to include the three non-executive members of the subcommittee set up to run the takeover negotiations with eIsland, Valentia, Kohlberg Kravis & Roberts and Blackstone.
The three appointees of 35 per cent shareholder Comsource are also in favour of doing a deal with one of the bidders. The non-executive directors on the subcommittee include the company chairman, Mr Ray MacSharry, and the deputy chairman, Mr Jim Flavin.
Mr MacSharry is a former finance minister and European commissioner who now sits on the board of several Irish plcs, including Smurfit and Ryanair. Mr Flavin is the founder and chief executive of DCC, the quoted holding company. The third non-executive director on the subcommittee is Mr Pat Molloy, the former chief executive of the Bank of Ireland and current CRH chairman.
The two executive members of the subcommittee are Mr Alfie Kane, the chief executive, and Mr Peter Lynch, the finance director. Neither is thought to particularly believe a sale is the best option for the business at the present time although an Eircom source said last night that both would do what was best for shareholders. Only one potential bidder, Kohlberg Kravis & Roberts, has said that it would ask them to stay on and take a stake in the business after a takeover.
Comsource, a joint venture between KPN of the Netherlands and Telia of Sweden, has three directors on the Eircom board, all of whom support a sale. Mr Martin Pieters and Mr Patrick Morley represent KPN which holds a 21 per cent stake, and Ms Annika Christiansson is the nominee of Telia. Eircom's former strategic partners are keen to cash in their Eircom shares, particularly KPN which has mounting debt problems.
Two of the remaining non-executive directors, Mr Paul Mackay and Mr Bill Attley, are understood to be opposed to a sale of the business in principle.
Mr Mackay is a chartered accountant and the treasurer of the Progressive Democrats, the junior Coalition partner. Mr Attley is the former general secretary of SIPTU and along with Mr Dick Spring, the former Labour Party leader, is seen as representing the staff of Eircom and the Employee Share Ownership Trust (ESOT), which owns 15 per cent of the group.
Mr Spring in particular represents the ESOT, but is not involved in its negotiations with the prospective bidders. Although the ESOT has backed the Valentia consortium ahead of last night's board meeting, Mr Spring is understood to be of the view that it should not have committed itself at this stage. He was not available for comment yesterday.
As with any quoted company, the directors of Eircom are obliged to act in the interest of all shareholders and take independent advice. If the board's advisers believe an offer represents full value for the company, directors are obliged to recommend it to shareholders despite any personal or ideological reservations they might have.
