Eircom's 500,000-strong army of small shareholders - already suffering a hefty loss on their investment in the group - face further losses this week, with the share price yet again expected to fall sharply.
The trigger for this latest fall in the Eircom share price is the decision by the two biggest shareholders, Dutch group KPN and Swedish group Telia, to sell their entire 35 per cent holding in a share offering to institutional and private investors.
Confirmation of the share offering by KPN and Telia is expected to come with Eircom's financial results on Wednesday.
Stock market sources said that selling such a large number of shares - almost 800 million of the 2.2 billion Eircom shares in issue - will mean that KPN and Telia will have to accept a price significantly below the €3.72 at which they closed last Friday. This is likely to weigh heavily on Eircom shares when they resume trading this morning.
A spokesman for Eircom would make no comment, but it is understood that the final preparations for the share sale have been completed and, barring a catastrophic fall in stock markets over the next few days, an intensive marketing campaign will begin, possibly as early as next week.
One source said the eventual sale price for the KPN and Telia shares may be €3.50 or below, given the current lack of appetite for telecom shares, especially smaller telecom companies such as Eircom. A sale price of €3.50 would be 40 cents below the €3.90 at which Eircom was floated last July and well off the €5.00 highest price shortly after the flotation.
However, Eircom and its adviser, investment bank Merrill Lynch, apparently believe that Irish private investors may still be attracted by the prospect of buying more Eircom shares despite the losses they are already suffering. It is understood that between 10 and 20 per cent of the shares being sold are being allocated to Irish investors.
The exact share allocation and price will not be decided until the roadshow to promote the shares to European and North American investors is completed, but one source said that about 15 per cent of the 770 million shares being sold will be aimed at the Irish public. This amount of shares sold to the public would be worth €400 million (£315 million) at a price of €3.50.
Despite suffering a loss on their investment in Eircom, however, some brokers believe that the shares being sold by KPN and Telia could be very good value if they are sold at €3.50 or less. When Eircom shares floated last July, they were sold at a 30 per cent premium to the average price of European telecom shares.
Now though, after heavy losses in recent weeks, Eircom shares are trading at more than 20 per cent below the European telecom average. A price of €3.50 would mean that the KPN and Telia shares would be sold at 30 per cent below the average.
"That sort of price and that sort of discount makes Eircom a far more attractive punt than when they floated last July," said one broker. Whether Eircom's small shareholders will be persuaded by that argument or by another advertising blitz to promote the share sale remains to be seen.