Eircom owner considers refinancing options

9 Aug 2010

Singapore Technologies Telemedia (STT), the majority stakeholder in Ireland’s former fixed line monopoly Eircom, has told the country’s Communications Minister Eamon Ryan that it is mulling refinancing options for the telco’s EUR3.3 billion (USD4.4 billion) of debt. According to local newspaper the Irish Independent, STT’s confirmation comes just months after Eircom CFO Peter Cross told analysts the firm was not preparing to embark on a debt restructuring programme, in May. Since then, Ryan has met with STT’s managing director and Terry Clontz and its CFO Stephen Miller, to consider refinancing options prepared by financial firms Gleacher Shacklock and JP Morgan which have been contracted to advise the company. It is understood the ratings agency Standard & Poor’s has warned that the former monopoly could breach at least one of its debt covenants in 2011. The Irish Independent adds that it has seen minutes of the meeting which was also attended by Jerome Barrett from the Employees Share Ownership Trust (ESOT) as well as the department’s secretary general Aidan Dunning.

Eircom said turnover for the nine months ended 31 March 2010 fell 9% year-on-year amid intense competition in the country and the impact of economic recession. Consolidated revenues dropped to EUR1.388 billion (USD1.707 billion) from EUR1.518 billion in the same period a year ago. Broken down, sales from fixed line services dipped 9% year-on-year to a little over EUR1 billion, while mobile revenues from Meteor contracted 6% to EUR351 million. Earnings before interest, tax, depreciation and amortisation (EBITDA) declined by 3% y-o-y to EUR497 million, and group operating costs, before non-cash pension charges, of EUR891 million, were down 11% reflecting Eircom said, reductions in pay and non-pay costs resulting from cost saving initiatives introduced during the year, and lower direct cost of sales in line with the reduction in revenue. CAPEX for the nine-month period was EUR218 million, compared with EUR270 million previously. Net debt as at 31 March 2010 was EUR3.3 billion and it had cash balances of EUR265 million.

Ireland,eir (formerly Eircom),

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