SBPost - How phone revenues could be hocked

MDR

In plain English, it means estimating what customers' future telephone bills will add up to, convincing eurobond investors that the estimate is reasonable and then passing the rights to the cash from those bills to the investors.

In return, Eircom would receive from the investors the cash proceeds of a eurobond issue. In effect, it means hocking the proceeds from the future phone bills of the natives.

The purpose of the exercise would be to allow Eircom's owners to strip out as much cash as possible, as quickly as possible, and give it back - not to the customer, but to the shareholders.

The problem is that if Valentia weretopursuethis approach and get away with doing this on a grand scale, Eircom would still be left with the costs of running the network, but would have pawned much of the cash flow with which to do it.

In a bid to resolve the resulting financial problem, Eircom could put ComReg under pressure to approve hefty price increases for customers or to starve the network of investment, or both.

also more interestingly

Valentia's accounts for the 15-month period to March 31 2002 show that its operating profits were not even enough to pay the interest expense on the debt raised to fund the acquisition.

The company has been paying its interest bill by flogging off non-core assets, including property and the Golden Pages, and by putting the business on a capital investment diet.

read full article here
eircom are so screwed, and so are we .... :mad:

LFCFan

They should quit now and sell the network to UTVip and let them be our main telecom provider. Can you imagine the difference if it were UTV and not €ircon running the show!

MDR

me wonders if UTV would have the €2 billion required ...

LFCFan

Originally posted by MDR
me wonders if UTV would have the €2 billion required ...

Sure couldn't we all chip in a few bob to help out.

BKtje

/me breaks out piggy bank and makes out a cheque of €7.84 to utvip

DeVore

Originally posted by LFCFan
They should quit now and sell the network to UTVip and let them be our main telecom provider. Can you imagine the difference if it were UTV and not €ircon running the show!

You know... thats not as crazy as it seems

DeV.

kamobe

You know... thats not as crazy as it seems

I'd contribute, but i spent my last 2 billion on sweets, sorry

parasite

the government should buy back the infrastructure as a priority, it's too important to leave to private interests
:mad:

Jorinn

They should file for bankruptcy.

Then the netowrk etc. should be auctioned by comreg on a basis of service provided, making it governmetn owned would probably mean ridiculous staffing levelks again which would bring us right back to the same problem again.

dahamsta

the government should buy back the infrastructure as a priority, it's too important to leave to private interests

Absolutely. Now where do you suggest they get the money from?

adam

Stonemason

Absolutely. Now where do you suggest they get the money from?

Hell if they stopped lining their own pockets with our hard earned tax money theyd have plenty.Though me thinks even they may struggle to find away to explain how they made Eircom private (very badly)then had to buy it back from Valentia after they had strip mined the company in to the pile of crud it is now.

Dangger

the government should buy back the infrastructure as a priority, it's too important to leave to private interests

Well if all goes according to plan and Valentia and the other investors get their money out now (or soon) through the hocking scheme, I'm sure we'll see the carcass that would remian sold off. It would not be worth much considering it would need so much investment as a result of having so little of its revenue invested back into its core network. It would however have ferocious debts into the future having its revenue hocked. Maybe it would just roll over and die and we could start the merry dance again.

PiE

Valentia's accounts for the 15-month period to March 31 2002 show that its operating profits were not even enough to pay the interest expense on the debt raised to fund the acquisition.

I love the way they say that like we should feel sorry for them.

Anyway, 15 month period to March 31 2002? So that's over two years ago, plenty of time for them to recoup the investment at the rate they're fleecing us.

longword

Originally posted by dahamsta
Absolutely. Now where do you suggest they get the money from?

The billions they got when they sold it off in the first place perhaps?

De Rebel

Originally posted by longword
The billions they got when they sold it off in the first place perhaps?

Thats both sensible and "do-able". That money resides in the National Pension Reserve Fund. It would be quite practical and very much in the national interest to use it on communications infrastructure. The only stipulation would be that it generate a return in the future. And of course a caveat that we never again allow the likes of Harney and O'Rourke loose - which might be a little more difficult to enforce......

Victor

I suspect that the bond purchasers will need a good argument to invest, one that will probably require massively cutting costs. But then again ..... maybe it will just screw up the company.

I found this piece also. I think it would make the banks / bond purchasers think twice. It all sounds a bit hyped and conspiratorial.

Multimillion euro loan crux for Chorus banks
30/03/03 00:00
By Michael Murray, Gavin Daly and Eamon Quinn

The banks lending to Chorus, the cable television company in which Independent News and Media (IN&M) has a 50 per cent stake, may have to make heavy provisions against future losses on their loans unless there is a new cash injection by shareholders.

Last week, IN&M announced the write off of its entire investment in the company. The latest accounts for Princes Holdings, which holds IN&M's stake in Chorus, show the group's assets exceeding its liabilities by €159 million.

The directors report said that since March 2002, the group had failed to achieve the performance criteria set out in its loan facility agreements to allow further draw down of the loans.

At the end of 2001, however, the group had loans of €223 million owing to the banks.

PS Junk bonds were all the rage in the 1980s.

dahamsta

The following refers to buying back the Eircom infrastructure, not Eircom hocking their future bills.

Perhaps the money can be found, but does anyone here honestly believe for a second that the public would stand for this? I'm being facetious obviously, because it's obvious from what's going on at the moment that what the public thinks doesn't matter a damn to our own local hawks. So let me rephrase: Does anybody really think that the TD's, who would lose the cred and the backslapping from the next bybass, school or hospital, would stand for this? You must be joking.

We know it would be a good idea. We know that it would do wonders for the medium to long-term economic stability of Ireland. But is it going to happen? Yeah, it is, and I'm having dinner with Julia Roberts next week, followed by an orgy in the Playboy Mansion. Gimme a break. Wake up and smell the coffee folks, you're wasting valuable energy.

adam

MDR

more difficult questions,
if they decide to go down this road,

1) do we want to stop them ?
2) can DoComm or COMREG stop em ?
3) if so should we be lobbing these groups ?
4) can Eircom cut anymore costs without impinging on their already woeful service, in order to pay back the loan ?
5) is it realistic to expect the govt to buy it back, (given that as Adam pointed out, they probabily don't want to, and the European Commission probabily wouldn't like it all).

longword

Originally posted by dahamsta
Perhaps the money can be found, but does anyone here honestly believe for a second that the public would stand for this?

It wouldn't look too bad if it was the infrastructure, and only the infrastructure being repurchased, leaving Eircom as a telecoms provider leasing that infrastructure like all the others.