EIRCOM’S SINGAPORE-based shareholder ST Telemedia has withdrawn its debt-restructuring proposal and resigned its representatives from the various boards and committees of the group’s companies.

The move follows the decision last week by first-lien lenders to the company, who are owed about €2.6 billion, to reject STT’s latest proposal to restructure Eircom’s €3.7 billion net debt.

This would seem to indicate that the Singaporean company, which owns 65 per cent of Eircom, has decided to cut its ties with the company. However, sources indicated yesterday STT might yet seek to re-enter the process.

The board of Eircom said it would proceed with “detailed discussions” with the first lien co-ordinating committee (FLC) regarding its proposal to restructure the company’s balance sheet.

This involves the lenders taking full control of the business, accepting a haircut on their debt and extending the maturity of the loans out to 2017 from 2014 currently.

Eircom chairman Ned Sullivan said there now existed an “environment of certainty for all the parties to move forward with the restructuring process”.

A takeover of Eircom by the lenders is expected to be implemented either through an examinership in Ireland or via a scheme of arrangement in Britain.

A spokesman for the lenders said their focus was to restructure Eircom’s balance sheet so the management plan to invest in a fibre rollout could be implemented as a “matter of urgency”.

He said the lenders’ co-ordinating committee would “engage constructively” with Eircom to underpin its commitment to turning around the company and, in particular, to progressing its fibre rollout programme.

Terry Clontz, STT’s senior executive vice-president for North America and Europe, said it was “disappointed” the lenders “did not engage” on its second proposal to restructure Eircom.

“STT put forward its first proposal to the FLC in early August 2011. Until November 2011, STT tried to actively engage the FLC for a speedy conclusion to the shareholder proposal.

“Within this period, despite an increasingly worsening macro-economic situation in the euro zone, STT improved upon its August 2011 proposal in an effort to conclude a debt restructuring package with the FLC in an expedited manner.

“A failure to reach any conclusion with the FLC on STT’s improved proposal, and an acceleration in the deteriorating macro-economic euro zone fundamentals, led STT to withdraw its first proposal.”

On December 12th, STT submitted a revised proposal that included an equity injection of €200 million, paid in two equal instalments one year apart.

However, STT inserted a clause that would have seen it repay the initial €100 million if Ireland had left the euro zone within a year of the payment being made.

STT also proposed taking a 75 per cent stake, offering the lenders 25 per cent of the equity. In addition, the lenders would have taken a haircut on their debts. STT’s revised offer was quickly rejected by the lenders.

Mr Clontz said the revised proposal “aimed to give Eircom the best opportunity to be competitive and viable over the long term, as well as maintaining some financial flexibility in the current challenging environment”.

He said STT was “disappointed” the lenders did not engage with it on its second offer. STT’s representatives on the main board of Eircom – Tan Guong Ching, Lee Theng Kiat and Mr Clontz – have resigned their positions.

STT took control of Eircom in January 2010, along with the employee Esot, which currently holds 35 per cent of the shares.