Lenders to Lean on Eircom
Further developments are expected before the end of the month.
There is growing frustration among the lenders at the operator’s failure to address its high debt levels, currently running at nearly €4 billion (US$5.35 billion), and its apparent reluctance to update lenders on what solutions it is considering.
Unless remedial action is taken, eircom could breach its leverage covenant when it is tested in June, though some lenders believe it could still scrape through and breach in September.
During the first quarter (ending September 30, 2010) results call last November, management said there was "significant risk of a breach" within the next 12 months, but remained confident a default could be avoided, and that it was working with advisers to assess options. On the call, the then CFO, Peter Cross, said the options included a renegotiation of covenants and shareholders putting in fresh cash.
— Ray Le Maistre, International Managing Editor, Light Reading