The Eircom Employee Share Ownership Plan (ESOP) Trustee has postponed a decision on whether to support the sale of Eircell to Vodafone. The trustee board has voting control over the 15 per cent of Eircom granted to staff at the time of its flotation in 1999.
The board met yesterday but was unable to discuss the issue as Eircom has yet to provide it with details on the sale. When the deal was announced before Christmas, a tentative timetable was set out under which all shareholders were to receive information by mid-February with a view to voting at an extraordinary general meeting in early March.
The sale needs to be approved by simple majority.
A company spokesman said yesterday that documentation was now due to go to shareholders by the end of next week. The meeting cannot be held for at least three weeks after the shareholders get the documentation, and is not now expected to happen until the end of March.
Eircom sources have denied the company wants to delay the meeting in the hope that Vodafone's share price will recover from its record lows. The timetable has slipped because of delays in concluding several commercial agreements between Eircom and Vodafone.
Shares in the British mobile phone giant continue to trade around record low levels, closing up marginally at 187.65p sterling yesterday. General telecom sector weakness and a number of Vodafone specific issues have combined to drive the shares down from the £2.45 sterling they enjoyed when the deal with Eircom was announced in January. Vodafone is offering one of its shares for every two Eircell shares which are being split off from Eircom shares on a share-for-share basis. The deal was worth just €1.41 per Eircom share yesterday compared to €1.84 per share when it was announced.
Board sources said yesterday the company's advice was still to proceed with the deal, despite the fall in Vodafone shares. Merrill Lynch and Goodbody Corporate Finance have told the board the all-share nature of the deal means it remains the best option, provided Vodafone does not fall further for non-sectoral reasons.
Eircom can opt out of the deal without incurring any penalties if the average Vodafone share price is below 220p sterling in the 10 days leading up to the shareholder meeting. The ESOP is being advised separately by Salomon Smith Barney but is likely to be told much the same thing. The ESOP is expected to support the sale as the firm has agreed to provide £22 million (€28 million) to fund a new ESOP for staff leaving to join Vodafone.
Its support would mean the sale was certain to go through as Comsource, the Dutch-Swedish consortium that owns 35 per cent, is also supportive.
The support of Comsource - 60 per cent owned by KPN of the Netherlands and 40 per cent by Telia of Sweden - and the ESOP would give the board 50 per cent support, without counting any of the large institutional investors which are also likely to still favour the sale, despite Vodafone's low share price.
