EIRCOM shareholders, who are nursing losses of almost 28 per cent on their investment in the former State telecommunications company a year ago, have been given some relief with the issue of one extra bonus share for every 25 shares they hold.
This is the equivalent of a 4 per cent bonus and will go a small way towards recouping some of the losses suffered over the past year.
Eircom shares moved from their July 1999 flotation price of €3.90 to a high of €5.00 shortly afterwards, but have fallen heavily in recent months and hit a low of €2.70 late last month. Yesterday, the shares recovered nine cents to €2.84.
The bonus share issue is restricted to those who bought shares in the July 1999 flotation and who were on the Eircom share register as of 11 a.m. yesterday. Amended share certificates will be sent out to Eircom's remaining 488,000 shareholders from next Friday.
At this stage, details of the total number of bonus shares to be issued are not available. But when Eircom floated on the Dublin and London markets, the Government retained just more than 1 per cent of the company - about 220 million shares worth in excess of €620 million (£488 million) - to cover the bonus issue. This means no additional shares are being assured, with the Government simply transferring its own shares to Eircom shareholders.
Not all the shares retained by the Government will be issued as bonus shares, as more than 60,000 investors have sold their shares since the flotation and the purchasers of those shares do not qualify for the bonus issue.
Meanwhile, market sources believe Eircom's 21 per cent shareholder, the Dutch telecom group KPN, is unlikely to go ahead with the sale of its stake until September. Initially, KPN planned to sell its entire stake this month but uncertainty over the intentions of another big Eircom shareholder, the Swedish group Telia, has meant KPN has little chance of selling such a large chunk of Eircom shares during the traditional August lull on the stock markets.
Telia, which owns 14 per cent of Eircom, had been expected to sell its stake at the same time as KPN but opted to hold onto them.
Both Eircom and KPN have been putting intense pressure on Telia in recent weeks to clarify its intentions, and it is expected that next week Telia will formally confirm that it will not sell its shares for at least six months. That will allow KPN to go ahead with its own sale in September.