Eir to refinance €1.6bn of loans to secure cheaper funding

Eir, the telecoms and media group, has launched a refinancing of its €1.6 billion in senior loans, which have been in place since the group emerged from examinership in 2012 .

Eir has hired Goldman Sachs, Deutsche Bank and JPMorgan to manage the refinancing of the loans and help it secure more favourable terms than the current coupon of 4 per cent.

The company then called Eircom emerged from the State’s largest-ever examinership ship case five years ago with 40 per cent of a €4.1 billion debt mountain, which had been built up over a series of ownership changes, written off.

Under the process, its most senior lenders, then led by US investment firm Blackstone, took control of the business and agreed a €2.3 billion loan with the company.

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Eir has since refinanced some of the debt through bond sales, selling €700 million of such notes last year. These carried interest rates of between 4.07 and 4.5 per cent at the time they were sold. However, the market yield on the bonds is currently 3.45 per cent.

The terms and duration of the senior lending facility have been tweaked a number of times since the original agreement was struck in 2012, most recently in October, when Eir managed to reduce the interest rate on the facility to 4 per cent from 4.5 per cent.

Further bonds

Eir’s banks are due to meet about the refinancing on Friday morning, with a deal expected to be struck by the middle of March. It is understood that Eir is also open selling further bonds as part of the refinancing.

The development comes just weeks after the world’s three largest ratings agencies(Standard & Poor’s, Moody’s and Fitch) each upgraded their views on Eir’s creditworthiness. However, all three continue to rate the stock below what is considered “investment grade”.

Eir, which abandoned an attempt in 2014 to float on the stock market for the third time, returned to annual sales growth for the first time since 2008 in the year to last June. It said last month that its sales for the six months to the end of December had risen a further 2 per cent to €660 million.

Moody’s said the recent performance improvement in Eir follows significant investment in fibre and fourth-generation (4G) mobile networks, coupled with recent investments in exclusive content through the acquisition of Setanta Sports Channel Ireland, rebranded to Eir sport.

“Since June 2012, the company has made capital investments of €1.5 billion to roll out fibre broadband to 1.6 million premises and expand 4G mobile coverage,” Eir said on Thursday. “This investment underpins the vision to provide converged broadband, mobile, TV and content offerings for customers as Eir transforms into a media company.”

Eir, which was valued at €3.5 billion by a 2016 share trade, does not plan to have another go at floating until at least 2018, chief executive Richard Moat has said.