Irish incumbent Eircom has seen its senior lenders appoint restructuring specialist Houlihan Lokey to advise them on the E3.1bn net debt owed by the operator, reports Dow Jones.
Eircom owes E2.8bn in net senior debt, E350m in floating rate notes and…
Irish incumbent Eircom has seen its senior lenders appoint restructuring specialist Houlihan Lokey to advise them on the E3.1bn net debt owed by the operator, reports Dow Jones.
Eircom owes E2.8bn in net senior debt, E350m in floating rate notes and E617m in PIK notes. The newswire cited creditors as saying that lenders are preparing for negotiations, as they tallied up the company’s valuation and need for cash.
Eircom CEO Paul Donovan warned at the end of last year that the company faced a “significant” risk of breaching financial covenants within the year if it failed to take action to lower net debt.
Gleacher Shacklock and JPMorgan continue to advise the fixed and mobile operator on a range of options, which include a restructuring, debt swap or rights issue.
However, while announcing a 5.6% fall in Q1 2010 revenue to E468m compared with the corresponding period last year, Donovan said Eircom “continues to manage its business in a difficult and uncertain economic environment”.
Adjusted EBITDA for the three months to September 30, 2010 remained steady year-on-year at E168m.
The company will report Q2 results on March 1.
Eircom first warned about the possibility of breaching covenants when it unveiled full-year results in August this year.
Although the company is confident it will be able to avoid a default, Donovan cautioned there are “no signs of growth or increased spending by customers. We do not anticipate this situation to change in the near to medium term”.
The situation is likely to be exacerbated by austerity measures that were announced in the Irish government’s Budget on December 7.
Separately, Irish press is reporting that Eircom’s management is this week meeting with the Communications Workers Union and owners Singapore Technologies Telemedia (STT) and Eircom Share Ownership Trust (ESOT) to discuss the potential E300m rescue.
