Eircom dealt major blow with shock resignation of CFO Cross

http://www.independent.ie/business/irish/eircom-dealt-major-blow-with-shock-resignation-of-cfo-cross-2469984.html

By John Mulligan and Donal O'Donovan

Wednesday December 22 2010

EIRCOM'S chief financial officer Peter Cross (right) resigned from the embattled telecoms company yesterday in a surprise move that marks the third senior executive departure within just three weeks.

The departure of Mr Cross is a serious blow to Eircom as it struggles to re-engineer an almost €4bn debt pile. The company is in danger of breaking the terms of the debt within a matter of months.

The reasons for Mr Cross's departure are not clear, but sources within Eircom suggest that a difference of opinion had evolved between him and Eircom chief executive Paul Donovan on how best to restructuring the telco's debt.

Mr Donovan has consistently downplayed the urgency of addressing the firm's debt profile, arguing that management has a number of months to arrive at a solution.

However, one lender to the company said a change of CFO could speed up restructuring talks.

"Eircom has not been moving with anything like the urgency the situation would benefit from, so I expect this is a positive development," he told the Irish Independent.

However another lender was more cautious.

"Management chopping and changing won't help because the restructuring process has to happen and needs someone to drive it," the investor, who holds Eircom bonds, said.

They said the move is a concern because it could now take months before a new CFO is installed and brought up to speed on the complex debt situation. The bondholders said they fear it means tackling the debt will be delayed further.

An Eircom spokesman confirmed the departure of Mr Cross, but declined to say why he had left.

Earlier this month, two other Eircom executives also left for "personal reasons".

Eircom's corporate affairs director, Andrew Haire, left the firm having only joined in the summer, while Conor Carmody, who was a director of Eircom's new mobile service, Emobile, also resigned.

Departures

The departures mean the top brass of the company mostly resides abroad. Mr Cross joined Eircom in 2007 from BT and prior to that was an executive director at Morgan Stanley.

Other Eircom executives have also left the company in recent months. They include Paul Reid, who was the director of networks and operations, and Gerry Culligan, who was in charge of the company's 'Re:start' unit that was responsible for steering restructuring in the group. He joined Aviva.

Gerry Quinn, who was chief information officer, left recently and joined the Central Bank.

Earlier this month, ratings agency Moody's warned that Eircom, which is majority owned by Singapore Technologies Telemedia, could breach debt covenants even sooner than previously forecast if austerity measures and lower consumer spending accelerate revenue declines at the company.

Eircom posted a 5.6pc decline in revenues to €442m for the three months ended last September. That included a 5pc fall in revenue from fixed-line services, to €347m, and a 9pc drop in revenue from its Meteor mobile arm to €108m. Group-adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) were flat at €168m.