The e-business infrastructure company ebeon, which is 51% owned by eircom, ceased trading today with the loss of 170 jobs in Dublin, London and the United States. RTÉ News has learned that the 170 staff are owed this month's wages.
The company, which has provided e-business solutions for some major financial institutions, faced a growing financial crisis in the run-up to Christmas, and sought a further investment of £5m from eircom. An eircom spokesman said tonight that they agreed before Christmas to invest an additional £2m on the basis that the other major stakeholders, would match this sum. He said that "unfortunately they failed to do so." The eircom board was given a report on the situation yesterday, and the new chief financial officer Peter Lynch advised that no further investment be made in the company. An authoritative source said this afternoon that eircom has invested £21m in the business.
The chief executive of ebeon, Bill Donoghue, informed staff this afternoon that since the company had run out of money, they had to cease trading. A senior company source expressed anger that the staff had not been paid.
Meanwhile, a senior eircom source said that the major shareholders had been made millionaires as a result of eircom buying a 51% stake, and they failed to come up with £2m to support the business. The source said that ebeon management had continued to ramp up the business with significant overheads - not reflecting what was happening in the marketplace and now they were attempting to offload responsibility for the financial crisis on eircom.
One of the three main minority shareholders, Jonathan Mills, said tonight that they had agreed to sell their stakes and invest the proceeds in the company. Discussions were at an advanced stage - but had not been concluded when the final eircom decision had been made. But company sources confirmed that eircom was told that the matching funding was not immediately available from the main minority shareholders. The other two are Norman Crowley and Robert Booth.
Eircom made its first investment in ebeon as part of its multimedia businesses in May 1999, just before the former state company's floatation, paying £10.5m for a 51% stake. Eircom invested a further £2m in the company then, and again invested another £8.5m in December 1999.
Ebeon sources say that in addition to its 51% stake eircom had a loan note for £12m worth of shares which gave them effectively 85% of the company.
