Eircom shares slide according to BBC

machalla

Not sure whether to be cheerful or depressed by this as Valentia and the rest will have already gotten their money back on this one leaving the new owners to clean up the mess.

http://news.bbc.co.uk/go/click/rss/0.91/public/-/1/hi/business/3549525.stm

eircomtribunal

There was a nice piece in the Indo yesterday,18. March, business page 6, with the headline:


"Eircom caught up in terrorism's crossfire"

"...But sentiment has changed and won't recover soon. Increased uncertainty stops Eircom being a one-way play. Forget gearing up.

Now the talk is of under-investment in local exchanges, fixed line loosing share and delays in delivering broadband. The alpha male is now a dog with fleas...

Even normal venture capitalist techniques to strip assets and extract capital are now presented as shenanigans. The flotation wont be pulled like C&C: There is already enough longer-term institutional interest to get it away at the lower end of pricing expectations – but it's no longer an obvious stag."

spongebob

Biddy has the funds in place through the ESOT to buy another 10% of the company or so, giving the ESOT about a 40% stake .......as long as the shares do not spike above €1.70 at which point Biddy will lurk rather than buy.

There is some interesting speculation about Index linked funds and their inclination not to buy to weight in this case. Normally if a company or €ircons size is floated, and takes up say 1.25% of the ISEQ Top 50 by capitalisation (€1B out of €40B) you will then see Index tracking funds buying enough €ircon stock fro 1.25% of their own fund. They will sometimes pay a premium to make the 'weight' as it is known.

In this particular case the funds are fairly blasé about making the weight . €ircon owes €2B which is a huge amount for an €1B value company which is 'supposed' to pay out a dividend of 7% as well after the €2B bondholders and Con Scanlons pension are taken care of first , of course.

M

jd

Originally posted by Muck
Normally if a company or €ircons size is floated, and takes up say 1.25% of the ISEQ Top 50 by capitalisation (€1B out of €40B) you will then see Index tracking funds buying enough €ircon stock fro 1.25% of their own fund. They will sometimes pay a premium to make the 'weight' as it is known.

M

tut, tut- your mental arithmetic let you down

spongebob

2.5 % of an Index Fund would be the weight in that example then JD....... pedant

Part of the reason for the selloff now is that certain punters will buy now and wait for funds doing their Q2 reweightings of stock in early April. There may be a spike upwards around then but I'd personally say it will be doing well to trade above €1.50 any time after the 15th April for the rest of the year.

M

SkepticOne

There is still the National Blackmail angle that the press seem to be overlooking. This is where Eircom (on behalf of their owners) make it known to the government that they are in a position to bring the country to its knees through further lack of investment if the government does not pay up or they don't get more line rental rises from the regulator. All the while using Eircom's monopoly infrastructure position to raise loans to pay dividends at increasingly high interest rates.

In this way, Eircom's lack of investment can work in their favour.

Well, it seems to be working as far as the regulator is concerned. Next week we'll find out if it has worked with the government.

Jorinn

Well, they could always be forced into bankruptcy, in which case a government agency could do what need to be done with them, then sell it on or keep it as a non-profit org......