Eircom’s rescue plan, currently in the throes of being finalised by the court-appointed examiner Michael McAteer, has been thrown into doubt following an unprecedented application to the Commercial Court, which is expected to be heard today. Local press reports say that with McAteer poised to conclude a rehabilitation plan with Eircom’s creditors on Friday, New York-based DW Investment Management, which is representing 52.4% of creditors holding EUR350 million (USD448 million) in floating rate loan notes in troubled carrier Eircom, and Hong Kong-based Hutchison Whampoa, the parent company of Irish mobile phone operator 3, are seeking recourse through the courts following the examiner’s decision last week to reject a revised EUR2 billion cash offer from 3 Ireland and Hutch.
Under the examiner’s current plan for Eircom and its subsidiaries Meteor Mobile Communications and Irish Telecommunications Investments, creditors holding floating rate loans will not receive a dividend and will have their debt effectively ‘extinguished’. However, DW Investment is seeking a ruling and claims its clients are being unfairly treated under the preferred scheme, noting that Hutch’s rejected bid contained a provision for a EUR50 million payment for those holding floating rate notes. The Hong Kong group has gone one step further, suggesting that where Eircom’s restructuring is concerned, the Irish telecoms group and its first lien senior lenders seemingly agreed to lock in any potential deal between themselves, at the time of the examiner’s appointment in March, thus preventing any real meaningful exploration of a possible resolution that included second lien lenders.