Businessman Brendan Murtagh has assumed €40 million in liabilities from Smart Telecom as a result of his agreement last night to take over the troubled operator for a nominal sum.
Smart will delist from the Alternative Investment Market, where its shares were suspended on Tuesday after Eircom's move to cut the company's network connection left its 45,000 fixed line customers without a phone service. The company will concentrate on its corporate and residential broadband service and it will not in the future provide a residential fixed line service.
Minister for Communications Noel Dempsey last night welcomed the deal but said "everybody will have to learn lessons" from the affair. Because Smart customers received no warning on Monday, Mr Dempsey plans to introduce new legislation to impose a statutory requirement on Eircom to provide at least 24 hours' notice of any future terminations against any wholesale customer.
Mr Murtagh is understood to have have made arrangements to pay Eircom some €2.3 million to settle part of the liability that led to the termination on Monday. Eircom will draw down the remaining €2 million it is due from a Smart Telecom bond.
After almost a week of negotiations between the two companies, the deal finalised last night is likely to safeguard the jobs of Smart's remaining staff.
Mr Murtagh had been expected to lead the deal for a consortium, but it emerged last night that is fronting the deal on his own. A company he controls called BidCo will buy Smart for €1, acquiring all its liabilities. Smart will be issued with 10 per cent of BidCo. "It is the directors' intention to retain this stake for the benefit of shareholders," the company said.
Smart's board, under new acting chairman Kyran O'Dwyer, advised shareholders to endorse the transaction with Mr Murtagh at an egm, the date of which will be fixed in the coming days.
"While this represents a very disappointing outcome for all shareholders who have supported the company over many years, it is the only option to ensure that shareholders have the opportunity to get some value for their shareholding. The proposal put forward by BidCo will allow Smart to deal responsibly with all its creditors in due course," said acting chief executive Ciarán Casey.
Mr Murtagh has been keeping Smart afloat to the tune of €2.5-€3 million per month in recent times. He owns 19.99 per cent of Smart and undertakings from other shareholders bring support for the deal to 42.1 per cent of its shareholders.
Outgoing chairman Ray King and directors Ken Barry, Paul Sullivan, Maria Pearl Roche and Tormod Hermansen resigned from the board.
