LENDERS TO Eircom are rejecting the latest restructuring proposal from owner Singapore Technologies Telemedia (STT), pressing ahead with their own plans to take over the company, people close to the situation said.
ERC Ireland Holdings, the parent of the heavily indebted Eircom confirmed last night that it received an extension on a waiver of breaches of the covenants on its €2.6 billion of senior debt. ERC has been given a new deadline of January 31st to comply with the terms of the covenants or restructure its debts. A statement released last night did not state how many of the senior lenders to Eircom, who are owed about €2.6 billion, had agreed to the waiver. An existing debt waiver expired yesterday.
The positive vote by Eircom’s lenders gives the company breathing space to continue negotiations on three separate debt restructuring proposals.
The restructuring is being handled by Eircom’s independent directors, who will make a recommendation to the full board as to which proposal to pursue.
STT submitted a proposal to Eircom’s independent directors and senior lenders on Monday to restructure the operators €3.75 billion debt in a bid to keep hold of the company. But some lenders, who control the restructuring process, dismissed the plan as “less attractive” than the first restructuring plan STT tabled during the summer.
“STT was prepared to write a €200 million cheque. You don’t do that unless you think there is a decent prospect. The read-through is that there is upside and why shouldn’t we take that upside ourselves,” one lender to Eircom said.
STT offered more money – €300 million – earlier in the summer. The new proposal required senior lenders to accept a net 13 per cent impairment of their debt, up from 8 per cent in the earlier proposal.
Some of Eircom’s senior lenders are recommending to press ahead with their debt for equity swap plan, which would wipe out all of Eircom’s junior ranking debt and reduce the senior debt by €200 million to €2.4 billion. Negotiations continue with the junior ranking second-lien lenders, which also made a proposal to swap debt for equity.
(Additional reporting, Reuters)
