EIRCOM DEBT SAGA SET TO END TODAY - Eircom is today preparing to conclude a major restructuring of its debts and the group, which was privatised in 1999, could face examinership in the coming days. Lenders are voting on a restructuring proposal which needs to secure more than 50% approval of its senior bondholders who are owed €2.7 billion. The company's board meets this afternoon. This comes as the group's chief executive Paul Donovan yesterday announced his decision to leave Eircom at the end of this year.
Eamonn Walsh, a professor at University College Dublin's business school, says that when Eircom was privatised it was a very successful company and had about 80% of the country's landlines. But then it went through a succession of ownership changes and every time it changed ownership it took on more debt. At the same time the number of landlines it controlled started to fall due to the more competition and the increased use of mobile phones. Professor Walsh says that Eircom now has about €3.75 billion in debt, which translates into debts of about €2,600 on every one of its landlines. He states that this a big number of monthly phone bills just to pay the company's debt, let alone its workers' wages and other costs.
Professor Walsh says it is unlikely that Eircom will be sold due to its debt problems, the fact that landlines are on the decline as well as increasing competition from the likes of UPC. The company also has no money to invest in new fibre networks and other developments. He says the most likely outcome is that its debts will be negotiated downwards and the company's debtors will take it on. He says that Eircom's new owners would be ''very foolish'' to make life miserable for its customers.
MORNING BRIEFS - Banks and insurance companies that breach consumer rights are to be named and shamed for the first time after the Government accepted a Bill which will allow a record of complaints against financial companies to be made public. Until now the Financial Services Ombudsman's office has not had the power to name offending firms. The Central Bank and Financial Services Authority of Ireland (Amendment) Bill 2011 will give more powers to the Ombudsman, allowing him to give details of the number and the types of complaints made against banks, insurance companies, stockbrokers, mortgage brokers, hire purchase providers, health-insurance companies and brokers.
*** 50 years after closing its distillery, Tullamore Dew is heading back to Tullamore, as owners William Grant and Sons invest €35m in a pot-still and malt-still distillery on the outskirts of the town. Grant says 100 jobs will be created during the construction stage and that 15 people will be employed at the new distillery. A new visitor centre will bring the number employed to around 25. Work there is supposed to begin later this year, subject to planning permission, and will take two years. Tullamore Dew's owners say sales are currently growing by over 15% each year. It says Tullamore Dew has almost doubled worldwide sales to nearly 700,000 cases since 2005.
*** Kenmare Resources, which operates a titanium mine in Mozambique, has reported profit after tax of $23.7m for 2011, compared to a loss of $16.3m the year before. Kenmare says robust demand increased market prices for titanium during the year. In a statement it says the outlook for the business is very positive. Given it plans to increase production and in an environment of increasing prices, Moma operations will generate a strong positive cashflow.