Valentia Holdings, the parent of Eircom, will proceed with a stock market flotation next month.
A formal announcement will be made today and the company will issue a prospectus next week, followed by a short "roadshow" of around two weeks' duration aimed at institutional investors.
The IPO could raise in the region of €1 billion, split between a primary offering of new equity and a second offering in which existing shareholders will sell shares.
The company is committed to raising at least €300 million in the primary offering, which will be used to repay debt, under the terms of a deal that secured the support of the holders of €1 billion of its bonds. Valentia is targeting an improvement in its credit rating from junk to investment grade as part of the IPO process.
The secondary offering of stock by the exiting shareholders could raise between €600 million and €1 billion based on a predicted enterprise valuation range of €3.2 billion to €4 billion for the business. NCB Stockbrokers suggest a market capitalisation in the range of €1.3 billion to €2.3 billion.
The Eircom ESOP trust will not participate in the secondary offering and could see its 29.9 per cent interest diluted, possibly to as low as 25 per cent.
NCB speculates that the cash-rich ESOP might seek to avoid dilution by participating in the primary offering. Providence Equity, which owns 48.3 per cent of the company and Soros Private Equity, which owns 19.5 per cent, will sell their entire holdings as will Lionheart Ventures, the vehicle through which Sir Anthony O'Reilly holds a 5.6 per cent interest.
The shares will be placed with institutional investors and the company will list on both the Dublin and London Stock Exchanges.
Share options worth up to 7 per cent of the company are expected to be granted to around 120 senior managers, including Dr Philip Nolan, the chief executive.
Sir Anthony will stay on as non-executive chairman of the company.
A number of new appointments are expected to be made to the board to replace departing directors who represent the venture capital investors.
Six non-executive directors are to be appointed including Mr Kevin Melia, the founder of Manufacturers Services Ltd. Mr Maurice Pratt, the chief executive of beverage and food group C&C, has also been approached.
Others include Mr Donal Roche, the former managing partner of Dublin solicitors Matheson Ormsby Prentice and Mr Padraic O'Connor, a businessman and former chief executive of NCB Stockbrokers. Mr Didier Delepine, the former chief executive of Equant, has also been approached. Equant is a subsidiary of France Telecom
Three executives will join Dr Nolan on the board. They are the chief financial officer Mr Peter Lynch, the commercial director Mr David McRedmond and Mr Cathal Magee, the managing director retail.
Mr Con Scanlon, the chairman of the Eircom ESOP, will remain as vice-chairman and Mr John Conroy, the chief executive officer of Merrion Capital Group, will remain as a nominee of the ESOP. An additional director is to be nominated by the ESOP.
