The firm responsible for restructuring Irish incumbent Eircom is handing the group over to its senior lenders, after rejecting a revised €2bn cash offer from Hong Kong-based conglomerate Hutchison Whampoa.
Grant Thornton, which is overseeing…
The firm responsible for restructuring Irish incumbent Eircom is handing the group over to its senior lenders, after rejecting a revised €2bn cash offer from Hong Kong-based conglomerate Hutchison Whampoa.
Grant Thornton, which is overseeing Eircom’s long-running restructuring, said it had recommended a scheme of arrangement based upon a proposal put forward by its first lien lenders, and supported by its second lien debt holders.
“An implementation agreement has been signed, scheme proposals have been issued and I have convened creditors’ meetings which will be held next Friday 18 May 2012 in Dublin where these proposals will considered by the company’s creditors,” said Grant Thornton’s Michael McAteer, Eircom’s court-appointed Examiner, on 11 May.
“As I have signed the implementation agreement, no other proposal will be considered.”
The recommended plan will see first lien lenders reduce the €2.7bn they are owed by 15%, with second-lien lenders receiving only 10% of their €350m debt, in return for equity. The move will likely wipe out Eircom’s subordinated debt, comprising €350m in FRN notes and €700m held by PIK lenders.
Grant Thornton’s recommendation was announced the morning after it rejected a second attempt by Hutchison to acquire the group for €2bn in cash, it is understood.
Unlike Hutchison’s first takeover attempt, which was rejected because of its conditionality, the second offer had no conditions attached, except for a request for due diligence.
However, Grant Thornton rejected the revised bid because of concerns over the time it would take to conduct due diligence, and the possible antitrust issues that could delay Eircom’s restructuring process, according to a source close to the situation.
Grant Thornton, Hutchison and Eircom declined to comment.
The acquisition would have allowed Hutchison, which is already in the Irish market through its mobile operator 3 Ireland, to bolster its European presence.
Eircom, which is advised by Gleacher Shacklock, is currently 65% owned by investor group Singapore Technologies Telemedia (STT), and 35% owned by employee share trust ESOT.
Houlihan Lokey is advising the first lien lenders, while Moelis is advising its second lien debtors. Cadwalader, Wickersham & Taft LLP is advising a steering committee representing the FRN notes, and Hawkpoint is advising the PIK lenders.