Debt discussions ongoing after lenders reject restructuring plan, says Eircom
Saturday, December 24, 2011
EIRCOM has said it is proceeding with detailed discussions with its first-lien lenders regarding their restructuring proposal for the group.
Eircom said its board informed the company?s majority owner, Singapore Technologies Telemedia (STT), that a majority of first-lien lenders rejected a plan put forward by the Singapore company. STT-nominated directors have resigned from the Eircom board with immediate effect, Eircom said in a statement.
Eircom chairman Ned Sullivan said that "after many months of deliberation", the announcement "provides an environment of certainty for all the parties to move forward with the restructuring process".
STT said in a separate statement it had withdrawn its proposal and was disappointed the lenders didn?t accept it.
On Thursday, Moody?s downgraded the parent of Eircom, saying the position of its creditors was deteriorating due to a weak Irish economy and delays in a proposed restructuring deal.
Laden with debt and suffering from under-investment since its privatisation in 1999, Eircom is in talks with lenders about restructuring its ?3.75bn debt.
Moody?s cut ERC Ireland Finance?s probability of default rating to Ca, or highly speculative, from Caa3.
It said the group?s loss-given default ? how much of its loan would be written off if they go bad ? was around 35% if a consensual restructuring is achieved.
"Today?s rating action reflects Moody?s concerns that the potential recovery pros-pects for Eircom?s creditors could be lower than previously anticipated by the rating agency," said Ivan Palacios of Moody?s.
A spokesperson for the first-lien committee said: "The key focus for the first lien is to restructure Eircom?s balance sheet so that the company?s management plan can be implemented as a matter of urgency."
The spokesperson added: "The first-lien solution firmly aligns the interests of debt and equity holders and extends the maturity profile of Eircom?s restructured debt to 2017."
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Source: http://feeds.examiner.ie/~r/iebusiness/~3/-88cXbyQHws/
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