Eircom could soon be in examinership

EIRCOM COULD be placed into examinership as early as the end of this month if senior lenders agree to the restructuring of their debts.

First and second lien creditors have until March 28th to agree to the final workout plan.

It requires the approval of just more than 50 per cent of the first lien holders, who are owed €2.7 billion, for the examinership process in Ireland to proceed.

This process, via the High Court, would begin by March 31st, when the company’s latest covenant waiver is due to expire.

It would be expected to wrap up some time in mid-June.

A pre-pack administration process in the UK is an alternative route. However, the parties involved are expected to proceed with an examinership to avoid potential tax issues that might be involved going through the British courts.

Eircom’s formal sales process closed on Monday with no new firm offers lodged. Morgan Stanley had run the process.

Under a revised plan from the first lien lenders, 15 per cent of their €2.7 billion debt will be written down.

The first lien lenders will take full control of the company, with up to 10 per cent of equity offered to Eircom’s management team.

Second lien lenders have been offered €35 million, representing 10 per cent of their debts.

A group of the second liens could yet contest the examinership proposal. Up to 46 per cent are said to be dissenters.

Some second lien lenders wanted 10 per cent of equity in addition to their cash payment.