WHILE THE rest of the economy stutters along, the tax-free Esot gravy train for current and former workers at Eircom continues on its merry way.

Documentation explaining the company’s latest change of ownership was dropped through the letter boxes of Esot members earlier this week.

It details how the 12,500 members have received more than €770 million in tax-free cash since Eircom’s privatisation in 1999.

And there’s more to come.

The Esot plans to roll over its 35 per cent stake in Eircom into the new ownership vehicle, Emerald Communications (Cayman) SPC. This is part of the proposed takeover of Eircom by Singapore Technologies Telemedia.

The Esot has received the nod from the Revenue Commissioners to continue doling out tax-free cash until 2014, by which time it hopes to cash in the last of its chips in a “realisation event” – most likely an IPO.

The Esot still owns 36.1 million Vodafone shares, which are currently worth €54 million.

It also owns 98.9 million preferences share in Eircom redeemable at €1 each.

Then there’s the ordinary shares in Eircom, which comprises its 35 per cent stake.

The document says it is “difficult to determine” the value of this stake. “Their true value may only be known when there is an opportunity to sell them.”

The Esot dates back to April 1998 when the company, workers and the government (which owned the then Telecom Éireann) agreed a deal, giving staff ownership of 14.9 per cent.

Staff were given 5 per cent for free in return for changes to work practices. The other 9.9 per cent was valued at €241 million but the company chipped in €127 million by way of foregone bonuses and changes to pension contributions.

Eircom employees borrowed €114 million to bridge the funding gap. They have had a spectacular return on their investment and it’s not over yet.