AN AUSTRALIAN-BASED group of former Babcock Brown executives yesterday tabled a A$175 million (€95 million) cash offer for the entity that owns Eircom and warned that the Irish telecoms business might default on its debts.
A company called TaemasBridge, which is led by former Babcock executive and financier Rob Topfer, who masterminded the Australian group’s takeover of Eircom in 2006, made the takeover move yesterday.
It proposes to delist Babcock Brown Capital Ltd (BCM), which owns Eircom and the Israeli Golden Pages, restructure its €3.8 billion debt and possibly introduce compulsory redundancies.
In a document posted on BCM’s website yesterday, TaemasBridge said it would use “the looming default to extract concessions from debt holders”. TaemasBridge also plans to take $5 million in fees from Eircom annually. If successful, this would be Eircom’s fifth change of ownership in the past decade.
The surprise move prompted management at Eircom to issue a robust response in a statement to staff last night. “Eircom does not support the TaemasBridge proposal and believes it is damaging to Eircom’s interests and its future,” management said.
“The model that Eircom has experienced since 2006 has failed the company, its employees and its investors, and has seriously damaged its credibility. The interests of Eircom and its stakeholders are absent from TaemasBridge and lessons have not been learned.”
Eircom rejected the suggestion that there was a “looming default” at the company.
Mr Topfer is proposing to replicate the Babcock Brown model for BCM and Eircom with a new management vehicle. His bid involves Rex Comb, the Australian executive who recently stepped down as Eircom’s chief executive. “According to the proposal document, TaemasBridge is based on the principle ‘use crisis to create value’ and on extracting cash from Eircom in the form of management fees,” the statement from Eircom added. “There is no plan to invest in Eircom.”
Steve Fitzpatrick of the Communications Workers Union was equally critical of Mr Topfer’s bid. “This is about squeezing the company dry and we’ll do all we can to stop it.”
Eircom is controlled by BCM, a satellite fund listed on the Sydney stock market which was set up by Babcock Brown to manage the Irish telco. Babcock has since collapsed under the weight of its various debts.
BCM said it was “evaluating the proposal” in addition to “a number of other proposals” that it has received as part of a strategic review aimed at “maximising shareholder value”. It said it would provide a “comprehensive strategic update” to shareholders on April 27th. BCM owns 57 per cent of Eircom, while Babcock Brown holds 7.9 per cent. An employee share ownership trust (Esot) owns 35 per cent.
Mr Topfer is offering A$1.05 a share for BCM. He plans to keep the fixed-line and mobile businesses separate while hiring a new boss to lead its Meteor mobile arm.
He proposes to use the €285 million in cash on Eircom’s balance sheet to pay off debt. The bid proposed to “re-engage” with Eircom’s Esot; appoint a new board to the company; “re-engage” with government and ComReg, and introduce “more realistic terms for redundancy”.