The Eircom Employee Share Ownership Trust (ESOT) was meeting in conclave yesterday as the 5 p.m. deadline for prospective bidders for the phone company to lodge their offers came and went.
A spokesman for the ESOT declined to comment last night but the fact that yesterday's meeting continued past the bid deadline was seen as confirmation that no deal had been done with any of the consortiums.
The seven trustees, four of whom are trade union officials, and their advisers from US merchant bank Salomon Smith Barney had been in contact with all three prospective bidders over the last few days.
Union sources pointed out last night that even if the trust opted to back one of the bidders it would still have to ballot its members before proceeding. A similar ballot was held earlier this month before the ESOT cast its vote on the decision by Eircom to sell its mobile arm, Eircell, to Vodafone. The past and present staff who are the beneficiaries of the ESOT voted strongly in favour of the sale and the trust cast its vote accordingly.
All the prospective bidders for Eircom have indicated to the ESOT that they are prepared to offer the trust the opportunity to increase its stake as part of a takeover of Eircom. The trust owns 15 per cent of the company on behalf of the employees and has said that it wants to at least double its stake.
All three bidders for Eircom are backed by venture capital funds which are likely to have first call on the company's profits in order to recoup their investment. They will almost certainly rank ahead of the ordinary shareholders such as the ESOT. The trust could find itself in the position of holding a larger stake in the company but receiving a significantly smaller income, corporate finance sources warned last night.
The repayment arrangements between the bidders and their venture capital partners will be directly linked to the price that is paid for Eircom. All the bidders are expected to pitch their initial offers around the 120 cents a share level, but have the ability to pay more. As of last night only eIsland, the consortium headed up by Mr Denis O'Brien, had confirmed that it had bid. EIsland has not disclosed who its financial backers are but it is advised by JP Morgan and its parent bank Chase.
The Valentia Consortium also wrote to the Eircom board with a proposal, according to sources close to the group which is chaired by Sir Anthony O'Reilly, the chairman of Independent News & Media. The other members of the consortium are Providence Equity Partners, Soros Private Equity Partners, Warburg Pincus and Goldman Sachs. The institutions behind IIU, which is controlled by Mr Dermot Desmond, are reported to be Advent, the US Venture capital company and Doughty Hanson. It was unclear last night if IIU had submitted a formal bid. No comment was available from the company.
