Some 45 senior staff in Eir are set to share €100 million in exchange for their shares as two companies controlled by French telecoms billionaire Xavier Niel take a majority stake in the phone group.
The windfall was revealed by sources on Wednesday as Mr Niel's investment vehicle NJJ and Paris-listed telecoms company Iliad, in which the entrepreneur owns a 52 per cent stake, confirmed that they plan to acquire 64.5 per cent of Eir in a deal worth €3.5 billion, subject to regulatory approvals.
The Irish Times first reported in September that Mr Niel, who founded France's first internet services provider in 1993 before selling it on the eve of the dotcom bubble in 2000, was circling Eir.
It also revealed the terms of the deal on Wednesday, including that Eir's chief executive Richard Moat plans to leave the company which he has led for the past three years.
Current Eir shareholders US hedge funds Anchorage Capital and Davidson Kempner Capital will also remain on board, although Singaporean sovereign wealth fund GIC, which built up a 20.6 per cent stake last year, is exiting.
Transaction
The value of the transaction is being put at €3.5 billion, including Eir’s €2.1 billion of net debt. This places an equity value on the business of €1.4 billion.
Iliad, which is taking a 31.6 per cent stake in Eir, has an option to buy out 80 per cent of NJJ’s holding in 2024 at a 12.5 per cent discount to “fair market value”. This would give the Paris-listed group a controlling interest of almost 59 per cent. Up until then Iliad will run its interest as a financial investment with no management involvement in Eir, executives at the French company said on an analysts’ call on Wednesday.
Eir should start to pay dividends to the shareholders from 2019, they said.
The arrival of Mr Niel’s companies would mark the seventh change in ownership for Eir in less than two decades.
Examinership
The former State-owned company racked up €4.1 billion of debt through a series of changes in control before it filed for examinership in 2012, resulting in €1.8 billion of its borrowings being written off. The borrowings accumulated before the restructuring were largely to finance returns to investors rather than invest in the business.
Oliver Rosenfeld, a partner at NJJ and Iliad board member, said that the French companies planned to make money from Eir "through dividends and not refinancing".
“It’s back to basics,” he said, adding that the new investors “aim to improve” Eir’s relationship with ComReg, the industry regulator, and the Government.
