Eircom Debt is now a round €4Bn

Sponge Bob

BCMIH is pleased to announce that it has finalised the terms of its debt financing package in relation to the recommended offer (the “Offer”) for eircom.

Rob Topfer Executive Director of Babcock & Brown Capital (“BCM”) said “eircom is a highly recognised name in the European credit markets and we worked with our underwriting banks to achieve a very attractive rating and debt package”

“The Senior Debt Facilities and the Floating Rate Note benefited from exceptionally strong investor demand, with the pricing on both facilities significantly below that assumed in our business plan. Assuming a 3 month EURIBOR rate of 3.19%, the weighted average cost of debt would be 6.00%. Assuming swapped rates of 3.71%, the weighted average cost of debt is 6.52%1.”

“Moodys and S&P have assigned corporate ratings of Ba3 / BB- and subordinated ratings of B2 / B.”

The debt financing is comprised of €3.65 billion of Senior Secured Facilities (including €150 million of undrawn revolving facility) and a €350 million Senior Floating Rate Note. The key terms of the debt package are:

Total First Lien Debt €3,150
Second Lien €350

Senior debt €3.5Bn

Revolving Credit Facility €150


Total Senior Facilities €3.65 BN


and


Floating Rate Notes 350m

Grand Total €4BN, €1000 for everybody in the country.


and they propose to pay €0.65Bn back in 7 years and roll the rest over .

secret_squirrel

Sponge Bob wrote:

“Moodys and S&P have assigned corporate ratings of Ba3

And as you mention in your tag but not in the post, thats the lowest third of the 'best' junk bond ratings. Not sure if its funny or tragic.

Sponge Bob

the tragic bit is that most of it is 2.75% over 3 Month EURIBOR and not fixed. Some is 5% over EURIBOR.

Euribor is not the base rate and is currently 6%

ESOT paid 4.5% over EURIBOR for its refinanced debt with which to but its shares in this thing.

If the ESOT takes over Retail they must take between 35%-40% of that lovely debt with them and I for one hopes they does

Their debt financing over the next 7 years will come in at €240m a year and upwards and €100m a year paying off the €650m too.

Then there is the issue of "Fees" to be paid to B&B as well as pay the debt. I am unsure what these will be but lets say €100m a year sound investment banker (ish) enough .

Thats €0.5 Bn gone out of eircom every year once we have another interest rate bump or two by christmas.

We additionally have the deaf operator saga incoming and peculiar pension liabilities which I for one cannot comprehend.

Phew , what a mess

probe

Don’t forget Babcock & Brown’s debt in the overall equation…
At 31.12.2005 they had interest bearing liabilities of $4bn.
The eircom purchase will add a further $6.8bn to this.
Aside from any other acquisition games they have been at in 2006, their debt is probably over $10 bn post eircom.

Babcock is a tiny company with revenues the equivalent of about €600 million in 2005. Eircom had revenues of €1.6 bn during the year ended 31.3.05.

While eircom’s revenues are generally speaking stable, repeat, government guaranteed monopoly stuff – Babcock appears to be a jack of all trades (and master of none?), in a small way in each market. Last year they went into electricity generation. This year its telecommunications – in the form of eircom.

If the going got tough in any of Babcock’s investments, eircom (ie Irish telephone subscribers) could find itself (themselves) being screwed to keep Babcock afloat.

Babcock has no telecommunications experience to bring to the eircom business. The eircom/babcock “group” is borrowed to the hilt, leaving little if any room to raise additional capital to modernise eircom’s 25 year old antiquated network.

Not a pretty picture for Ireland SA.

All the more reason why every MDF in the country should be unbundled as a matter of urgency to help diversify the marketplace away from this high risk scenario.

probe

Liam Byrne

Jeez - a debt like that and still people get jittery over Smart's financial situation.

Oh to have the power over the media that eircom do......

thefinalstage

Soon our line rental will be 50 euro and we will have to supply the new copper...

10 billion euro for our telecommunications infrastructure right? The government could get it of them for six by offering to pay off the debts...:( *sigh*

cgarvey

Soooo last year, and given the lack of anything new, closing.