Eircom Hires Rothschild to Explore IPO in ‘Exceptional’ MarketAmy Thomson
Eircom Group, the former state-owned Irish phone company that emerged from bankruptcy protection in 2012, is exploring selling shares to take advantage of a boom in European initial public offerings.
The company has hired Rothschild and may line up other banks to look at a share sale, Chief Financial Officer Richard Moat said in an interview. Moat said the company hasn’t decided on the timing of the offer or how much of the business to float.
Eircom would use the cash raised to pay down debt, Moat said. The company is cutting more than a third of staff and building a broadband network that will cover 70 percent of the country by 2016, part of a plan to cut revenue declines and save 100 million euros ($139 million) annually starting this quarter.
“An IPO is obviously a very good option for the group because the equity capital markets are exceptional at the moment; there’s a lot of IPOs being carried out in the U.K., Ireland and Europe generally,” Moat said. “Markets are fickle. They don’t stay good forever. If it looks like a viable option, we wouldn’t wait for an extended period.”
With the economy recovering, more than 300 share sales have been priced in Europe so far this year, up 19 percent from a year earlier, according to data compiled by Bloomberg. The number of Irish share sales that have priced has doubled to 15.
Eircom racked up 4.1 billion euros of gross debt through a series of ownership changes in 13 years before it filed a creditor-protection petition in March 2012, the country’s biggest at the time. The company now has about 2.35 billion euros in debt, Moat said.
Earnings fell 1 percent to 233 million euros in the six months through December, leaving out interest, taxes, depreciation and amortization, the company said in February. Sales declined 7 percent to 657 million euros.
Eircom’s biggest shareholder is Blackstone Group LP, which owns about 25 percent, a spokesman said. Alcentra Ltd., the money manager owned by Bank of New York Mellon Corp., is also a major shareholder, along with Silver Point Capital LP and Anchorage Capital Group, he said.
After the company filed for protection, 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 combined as securities called “stapled units” for two years. The trades became unstapled last week, letting the company’s investors exchange equity and debt separately, Moat said.