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New bid for eircom.

  • 13-03-2012 11:44pm
    #1
    ninjasurfer1
    Registered Users, Registered Users 2 Posts: 485 ✭✭


    http://www.independent.ie/business/irish/blackstone-bid-threatens-to-throw-eircom-restructuring-off-course-3047502.html
    THE race for Eircom has been thrown open after US mega-fund Blackstone GSO emerged with a surprise takeover move.

    GSO is a major lender to Eircom and up to now was working with a "co-ordinating committee" of other top lenders on joint plans to take control of the company in exchange for writing off debt.

    Now it has emerged that GSO will put forward its own debt restructuring plan when Eircom lenders meet in London tomorrow.

    GSO was not available for comment but a number of sources involved in the negotiations confirmed the move.

    It throws plans to place Eircom into examinership within weeks into confusion.

    It also highlights the intense interest of massive US private equity firm Blackstone Group in so-called "distressed" Irish assets.

    GSO is part of Blackstone which has become a major player in Ireland. It's advising Irish Bank Resolution Corp's (IBRC) on the sale of its loan portfolio, was a bidder for a portfolio of NAMA loans, and acquired Dublin money manager Harbourmaster -- which is also a significant Eircom lender.

    Blackstone CEO Stephen Shwarzman was paid a staggering €3m per week last year, and met Taoiseach Enda Kenny in November as his firm's interest in Ireland intensified.

    Now GSO is offering to lend an extra €150m of fresh cash to Eircom as part of its proposal. In exchange, it wants its old loans reinstated on better terms and a share of control of the company on an equal basis with other lenders.

    Senior lenders owned €2.6bn by Eircom had planned taking control of Eircom through an examinership this month.

    The "first lien" debt is owed to a syndicate of 200 investors. They get to vote on any proposals for the future of the business because Eircom is in default on the secure loans.

    Remaining members of the "co-ordinating committee" will also table their revised offer in London tomorrow.

    Under the GSO plan Eircom could even avoid Examinership altogether, according to trade publication Capital Structure.

    Capital Structure said GSO has offered a €35m "consent fee" or sweetener to Eircom's second lien lenders if they back its plan.

    The second lien lenders would see €350m they are owed by Eircom wiped out under the alternative proposal.

    The sweetener is being offered because the same hedge funds that own the "second lien" debt hold a slice of the safer first lien debt. In a tight vote their support could prove crucial. If a consent fee is paid it means Eircom's debt could be restructured through a "scheme of arrangement" in the UK courts.

    Without the consent a legally tougher but more uncertain examinership process is needed to wipe out the junior loans.

    Sources last night told the Irish Independent that the second lien lenders were now in talks with both sides ahead of tomorrow's crucial meeting.

    A deadline for offers from any non-lenders looking to buy the company closed last night.


    I wonder if they can burn the second lien bondholders if they don't go into examinership?


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