DIGIWEB’S PROPOSED takeover of Smart Telecom, which has been in examinership since August 31st, will result in creditors receiving just €1 million for the €14 million they are owed.
This is revealed in the scheme document sent to Smart’s investors and creditors this week.
Under a deal put together by examiner John McStay, of accountants McStay Luby, Digiweb will acquire Smart’s assets and customer base for €1. However, the Louth-based telco will inject €2 million into Smart in working capital. Some of Smart’s bondholders have also agreed to provide a loan of €625,000 to the company. The transaction will substantially restructure Smart’s balance sheet and help the company to become profitable.
Both companies will be Ebitda (earnings before interest, tax, depreciation and amortisation) positive following the transaction, with combined annual revenues of about €40 million and more than 150 employees.
Smart’s lenders, who are owed €70.6 million, have agreed to take a 79 per cent haircut on their debts. A €54 million loan is being substantially written down. The bondholders will receive between €10.5 million and €22.5 million, depending on the date of the repayment. The loan is due to mature in December 2012. No interest will be paid on this debt.
A €4.1 million loan is being deferred until December 2011, with a reduction in the interest rate to 10 per cent from 15 per cent. A “second-ranking” loan of €12.5 million has been written down to €250,000 and will be discharged through the examinership process.
Post the transaction, Digiweb and Smart will have a subscriber base of 46,500 business, residential and government customers.
