Examiner reports: Eircom booked EUR1.49bn pre-tax loss for 2010/11

20 Apr 2012

Ireland’s foundering former monopoly operator Eircom made a pre-tax loss of EUR1.49 billion (USD1.95 billion) for the financial year ended 30 June 2011 on revenues that fell by 8% year-on-year to EUR1.68 billion. According to The Irish Times, the telco’s results were revealed in a report to the Republic’s High Court by interim examiner Michael McAteer of Grant Thornton, who yesterday had his appointment confirmed by Mr Justice Peter Kelly. Although Eircom has yet to publish its full, audited accounts for the year to end-June 2011, the unaudited preliminary figures were made public yesterday, confirming that the carrier moved from an operating profit of EUR292 million in fiscal 2009/10 to a EUR1.2 billion loss last year, while a net profit of EUR47 million became a significant loss. In the same period the telco’s revenue dipped from EUR1.82 billion, EBITDA remained static at around EUR649 million and total borrowings stood at EUR4.12 billion, it said. The report noted that the volatile fluctuation in profitability was attributable to ‘non-cash charges arising from goodwill impairments relating to the previous acquisitions of the fixed and mobile business’. Adding to Eircom’s woes, the group breached covenants with its senior lenders on 30 June 2011 and its loans were called in on 28 March 2012, with the company seeking the protection of the court via examinership.

The interim examiner’s report confirms that he is working with Morgan Stanley to identify possible companies which would be interested in acquiring the Irish telco. It is understood Egypt-based Accelero Capital was the only interested party to submit a credible offer for Eircom during the pre-examinership sales process, which Morgan Stanley also oversaw. Parties wishing to express an interest in bidding for the Republic’s troubled operator have until 23 April to submit indicative offers. A second phase will then begin in which due diligence would take place ahead of a 7 May deadline for final bids. The examiner added that no expressions of interest had been received to date. The latest developments mean that Justice Kelly has effectively granted Eircom 100 days’ grace to restructure its massive EUR4 billion of debt.

In the wake of the announcement, Eircom group CEO Paul Donovan reassured his customers, staff and suppliers that it was ‘business as usual’ with the carrier, saying that the restructuring was a ‘necessary and unavoidable step on our journey to addressing the unsustainable level of debt on our balance sheet and continuing our operational transformation into a vibrant and competitive company.’

Ireland,eir (formerly Eircom),

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