Eircom Group, the former Irish state-owned phone company that has changed ownership six times since 1999, may see more shareholder movement next year as trading restrictions are lifted on senior lenders who took control in 2012.
“At the moment it’s difficult for people to accumulate equity positions, as they have to take over debt as well,” Chief Financial Officer Richard Moat said in a phone interview. The end of the debt-equity agreement “will definitely change things” and will probably lead to an “over-the-counter grey market for equity” in the company, he said.
Blackstone Group LP (BX) navigated trading constraints to build up a holding of almost 25 percent in closely held Eircom at the end of September, according to the Dublin-based company’s bondholder filings. The world’s largest manager of alternative assets held 18.6 percent in April, according to an Eircom bond prospectus that disclosed stakes of the largest lenders-turned-equity-holders.
Eircom racked up 4.1 billion euros ($5.6 billion) of gross debt through a series of ownership changes in 13 years before it filed the country’s biggest creditor protection petition in March 2012. Its most senior lenders, led by New York-based Blackstone, wrote off 15 percent of their 2.4 billion-euro net loans and took control of the company as more junior creditors lost almost all their investment.
Under Eircom’s rescue plan, the lenders agreed to only trade equity and debt in so-called stapled units for two years to June 2014.
Blackstone’s 24.7 percent stake at Sept. 25 compared with the 6.7 percent held by Alcentra Ltd., the money manager owned by Bank of New York Mellon Corp.; Silver Point Capital LP’s 3.5 percent; and Anchorage Capital Group LLC’s holding of almost 3 percent.
Moat declined to comment on ownership movements since then. Paddy Hughes, a spokesman for Blackstone who works at Drury Communications, wasn’t immediately able to comment.
Eircom said today that adjusted earnings before interest, taxes, depreciation and amortization fell 1 percent to 119 million euros in the first financial quarter through September as sales declined 9 percent to 323 million euros.
“We’ve seen a clear stabilization in Ebitda in recent quarters, after years of decline,” said Moat.
The company is counting on its new high-speed fiber broadband service, its introduction of Ireland’s first 4G mobile service in September, and the start of the eVision television service last month to help rebuild revenue, he said.
“It’s difficult to predict accurately” when sales will stabilize, Moet said. “But the Irish macro-economy is going in the right direction.”
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