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Eircom Parent ERC in Failure-To-Pay Credit Event, ISDA Says

March 20 (Bloomberg) -- Credit-default swaps on Eircom Group Ltd.’s parent ERC Ireland Finance Ltd. will be settled after the International Swaps & Derivatives Association said there has been a failure-to-pay credit event.

ISDA’s determinations committee ruled an auction will be held “in respect to outstanding CDS transactions,” it said in a statement. There were 2,080 swaps contracts covering a net $293 million of the Dublin-based phone company’s debt as of March 9, according to the Depository Trust & Clearing Corp., which runs a central registry for the market.

ERC Ireland Finance was cut to ‘selective default’ from CC by Standard & Poor’s last month after the company missed a coupon payment on its floating-rate notes. Eircom, seeking to restructure 3.75 billion euros ($5 billion) of debt, may seek protection from creditors as early as this month, three people with knowledge of the matter said Feb. 15.

Eircom said March 14 it supports “in principle” a restructuring proposal submitted by a group of first-lien, or most senior, lenders. They proposed writing off 15 percent of their loans, double the amount previously planned, in exchange for full control of the company, two people with knowledge of the matter said that day.

The first-lien lenders, led by two Blackstone Group LP units, envisage second-lien lenders recovering 35 million euros, or 10 percent, of their loans, with more junior creditors losing virtually all their investment, according to the people.

Editors: Michael Shanahan,

To contact the reporters on this story: Joe Brennan at jbrennan29@bloomberg.net; Abigail Moses in London at amoses5@bloomberg.net

To contact the editor responsible for this story: Edward Evans at eevans3@bloomberg.net

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