EIRCOM HAS engaged real estate group DTZ to conduct a feasibility study on the possible sale and leaseback of some of its exchange buildings as it seeks to free up cash for the debt-laden business.
It is understood that a number of prominent sites in Dublin have been identified for its latest sale and leaseback deals.
Informed sources said the company is hoping to raise up to €50 million from the transaction.
Eircom generated about €180 million in sale and leaseback deals last year in Ireland. This included about €20 million relating to a large exchange building in Citywest in Dublin.
“DTZ has been engaged as part of Eircom’s ongoing property review to conduct a feasibility study to explore various options with some of our properties, which may or may include the possible sale and leaseback of some exchange buildings,” the company said.
It is understood that discussions have already taken place between DTZ and potential interested parties.
Eircom still owns a large number of exchanges in Dublin that could potentially release cash to the business.
The company is in discussions with its trade unions to secure €90 million worth of labour cost savings. This will inevitably involve more voluntary redundancies although Eircom’s management has so far declined to put a figure on any reduction.
Eircom is also seeking to restructure its near €4 billion debt. In November, it signalled it could breach its banking covenants within 12 months.
Ratings agency Moody’s has suggested a breach could come by the end of June.
Eircom will publish its half-year financial results on March 1st. It is also expected to provide an update to the market about a possible covenant breach.
A board meeting is scheduled for February 28th. Two representatives from Singapore-based STT are expected to attend. One possible solution to a covenant breach would be an injection of new equity by STT, which took control of Eircom in January 2010, and the employee Esot.
It has been speculated that up to €300 million could be injected into the business by shareholders.
