An unprecedented application to come before the Commercial Court tomorrow could affect plans by Eircom's examiner to finalise a survival scheme with creditors on Friday for companies employing 5,800 people.
New York-based DW Investment Management LP (representing 52.4 per cent of creditors of Eircom holding €350m Floating Rate Notes) and Hutchison Whampoa (HWP), parent company of mobile phone operator 3 Ireland, have taken proceedings following last week's decision of Eircom examiner Michael McAteer rejecting a revised €2 billion cash offer for Eircom from 3 Ireland and HWP.
Under the proposed scheme of arrangement for Eircom Ltd, Meteor Mobile Communications Ltd and Irish Telecommunications Investments Ltd, the floating rate noteholders will not receive a dividend and will have their debt “extinguished”.
DW Investment Managers claims its clients would do better under the HWP proposals as they would involve a €50m payment for FRNs.
HWP has alleged that "lock-in" restructuring proposals for the Eircom companies agreed between the companies and senior creditors around the time of the examiner's appointment have effectively pre-determined the success of the proposed scheme of arrangement.
Among various directions being sought from the court by the applicants is one retracting a letter sent from Morgan Stanley, on behalf of Mr McAteer, advising HWL the examiner had decided not to proceed with the HWL bid and, as a result, HWL would not be allowed into phase II of the bidding process.
The applicants are also seeking a direction requiring the examiner to postpone meetings of the Eircom companies creditors convened for this Friday.
When the matter was mentioned to Mr Justice Peter Kelly at the Commercial Court today, he told Michael Cush SC, for the applicants, he had never heard of an application like it. Mr Cush agreed it was unprecedented.
The judge agreed to allow the application be served at short notice on the examiner and other affected parties and returned the matter to tomorrow.
The applicants are seeking directions requiring the examiner to engage with them and allow them access to Eircom's management team, information relating to the Eircom companies and other materials.
The proceedings could defer meetings of creditors in Dublin on Friday where the examiner intended to outline scheme of arrangement proposals which would then be put before the Commerical Court for approval.
The scheme was expected to receive the necessary support from creditors as they had already agreed to its terms in principle before the examinership process commenced on March 29th.