May 17 (Bloomberg) -- Hutchison Whampoa Ltd.’s 2 billion euro ($2.5 billion) bid for Eircom Group was rejected partly because it would have doubled the losses suffered by the phone company’s most senior lenders, the examiner who turned down the offer said in a court filing.
The first lien lenders to the Dublin-based company would have recovered 70 percent of their debts, compared with their own plan for 85 percent recovery and full equity control of Eircom, the examiner Michael McAteer said in an affidavit filed this week and obtained by Bloomberg News.
Hutchison Whampoa and New York-based DW Investment Management, which is representing some Eircom floating-rate note investors, started a legal challenge on May 15 against McAteer’s rejection. Judge Peter Kelly is due to hear the case in Dublin today, after McAteer said he will recommend a survival plan based on a proposal from the most senior lenders after rejecting the offer from Hutchison’s Irish unit, Three Ireland.
“Three believes its offer is best for Eircom, its stakeholders and Ireland Inc,” spokeswoman Rachel Channing said in an e-mailed statement. “Three’s offer for Eircom still stands and it is willing to meet with the examiner to firm up on its proposal.”
A first Hutchison bid on April 27 included a number of conditions, including the need for approval by 50 percent of first-lien creditors for the offer, “which was not forthcoming,” the examiner said in the affidavit.
While a second offer on May 7 dropped this condition, the bid was still subject to due diligence and antitrust clearance, which was “questionable,” he said in the affidavit.
A spokeswoman for McAteer declined to comment.
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