Eircom has filed a prospectus with the Central Bank as it works toward joining the stock market for the third time in 15 years, according to three people with knowledge of the matter.
Eircom, which has been controlled by lenders led by Blackstone since exiting examinership, may seek to raise as much as €1 billion, said the people, who asked not to be identified because the deliberations are confidential.
While Eircom’s advisers have approached private-equity firms including Apax Partners, CVC Capital Partners and KKR, the firms have decided against bidding due to high valuation expectations and a lack of growth prospects, another person with knowledge of the matter said.
Eircom came out of examinership two years ago after creditors wrote off 40 per cent of its more than €4 billion in gross debt, which was accumulated during a series of ownership changes.
Cash for dividends
While the figure had dropped to €2.4 billion as of June 30th, Eircom plans to use the proceeds of a share sale to further trim its liabilities and free up cash for dividends, the people said.
Filing the prospectus with the Central Bank does not commit the group to a flotation but is seen as a strong indicator if its current thinking.
Representatives for Eircom, CVC, KKR, Apax and the Central Bank declined to comment.
"Defensive-type companies with high dividend yields have an appeal for investors given the current low interest-rate environment and Eircom and other telecom companies would fit this profile," said David Holohan, head of research at Merrion Capital in Dublin.
He said Eircom could have a valuation of as much as €3 billion including debt.
The former State-owned carrier held its initial public offering in 1999. Two years later it was taken over by a group led by businessman Sir Anthony O’Reilly. It returned to the stock market in 2004, before it was acquired in 2006 in another leveraged buyout.
Eircom lists the group led by Blackstone's credit units as its largest shareholder, with a 24.4 per cent stake, followed by Anchorage Capital entities, with 8 per cent, and Credit Suisse with 6.3 per cent, according to an August 28th bondholder filing. The current senior lenders are Eircom's seventh set of owners. Eircom hired Rothschild, Goldman Sachs and Morgan Stanley earlier this year to advise on options for the business.
Earnings before interest, taxes, depreciation and amortisation were €469 million in the year through June, on revenue of €1.3 billion. – (Bloomberg)
