Eircom is to float on the stock market at a price of between €1.48 and €1.75, valuing the company at €1.26 billion.

The company said the offering would raise €831m, with the sale of new shares raising €300m and the sale of existing shares bringing in €531m.

Most of the private equity backers of the buy-out of the company in 2001 are selling nearly all of their holdings. Providence Equity Partners currently holds 44.2% of Eircom. Soros Private Equity Partners has 17.9%, Tony O'Reilly's Lionheart 5% and Goldman Sachs 1.4%.

The Employee Share Ownership Trust (ESOT) will continue to hold 29% of the company as it will take up some of the new shares being issued.

The proceeds raised from the issue of new shares will be used mainly to pay off debt.

Eircom said it expected the offering to be priced on March 18, with dealings in the shares starting the following day. The company plans to pay an 11 cent per share dividend for the year to the end of March 2005.

Tony O'Reilly will chair the new Eircom board, with ESOT chairman Con Scanlon as vice-chairman. A number of new non-executive directors - including C&C Group chief Maurice Pratt, MSL co-founder Kevin Melia and former ACC chairman Padraic O'Connor - will join the board.