Irish incumbent Eircom has reached an ‘in principle agreement’ with unions over cost cutting measures aimed to generate E92m in savings by 2013.
The measures include 10% pay cuts for 18 months and an undisclosed number of voluntary redundancies,…
Irish incumbent Eircom has reached an ‘in principle agreement’ with unions over cost cutting measures aimed to generate E92m in savings by 2013.
The measures include 10% pay cuts for 18 months and an undisclosed number of voluntary redundancies, according to a framework document obtained by TelecomFinance.
Eircom CEO Paul Donovan has previously warned that job losses will be “inevitable” and could be “substantial” as the group looks to restructure its E3.75bn net debt.
A spokesman for the company said: “The reason we haven’t given a number [for job losses] is that the target is a cost reduction figure of E92m not a specific jobs figure … The other point to make is that large scale downsizing at Eircom has always been on a voluntary basis and that will remain in this case.”
Eircom’s cost saving plan will now be put to a ballot of Trade Union Alliance members.
Announcing the initial agreement, Donovan said: “This plan is a vital next step in the company’s transformation journey to secure the future of the organisation.”
While posting Q2 results on Tuesday the group revealed it was talking to lenders to avoid the “significant risk” of breaching financial covenants within either three or six months.
Although the company is currently in full compliance with all its financial covenants, discussions with lenders will take place in March and April to address long-term liabilities.
Gleacher Shacklock and JPMorgan are advising Eircom on a range of options, including a restructuring, debt swap or rights issue.
Linklaters and Arthur Cox are its legal advisors.
For the three months to the end of December 2010, Eircom posted adjusted EBITDA down 3% to E154m, compared with E159m for the corresponding period last year.
