Eircom plans €3.5bn March flotation

Eircom, the Irish fixed-line telecom provider, is to be floated on the Irish and London Stock Exchanges by the Valentia private equity consortium, which acquired the business in October 2001.

Eircom, which is owned by private equity consortium Valentia, said in a statement today it is planning to launch a flotation in Dublin and London in the first half of March.

Valentia was reported to have paid €2.8 billion ($3.5 billion) for Eircom when it was taken off the stock market in late 2001. The consortium was led by Irish media magnate Anthony O’Reilly, who took a five percent stake, and included private equity firms Providence Equity Partners (43.5 percent), Soros Equity Partners (18.5 percent) and Goldman Sachs Capital Partners (1.5 percent). The flotation is expected to value the firm at around €3.5 billion.

A report in Reuters cited sources close to Valentia as saying that the consortium would sell most, if not all, of its stake in the business, while 29 percent would remain with the Eircom Employee Share Ownership Trust.   

The company is planning to raise around €300 million in gross proceeds through a primary offer of new ordinary shares plus a “substantial” secondary offer of existing ordinary shares. Net proceeds will be used to repay a portion of existing debt and/or for general corporate purposes. A €2.4 billion recapitalisation of Eircom was led by Deutsche Bank in July last year.

Eircom was originally floated in July 1999 but thousands of small investors lost millions when the telecom bubble burst, and the company’s share price plummeted. It is the largest provider of fixed-line telecommunications in Ireland with a market share of approximately 80 percent in the three years to September 30 2003 according to ComReg, the Irish telecommunications regulator. It is also a leading provider of broadband services and is Ireland’s largest internet service provider.

In the nine months to 31 December 2003, Eircom had consolidated turnover of €1.2 billion and EBITDA of €450 million with cash flow associated with capital expenditure of €150 million. At the same date, net debt at Valentia subsidiary Valentia Telecommunications was €2.1 billion.   

“I am very pleased that since the Valentia takeover of Eircom in 2001 we have substantially completed our objective, which was to turn around the performance of the business,” said Anthony O’Reilly. “The company is now focused on its core business of fixed line telecommunications, it is more efficient and it is delivering a lower cost and higher quality service to its customers.”