eircom

26 March 2004

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eircom, the Dublin-based provider of fixed-line telecommunication services in Ireland, was listed on the London and Dublin Stock Exchanges on 24 March 2004 and trading in the stock commenced on 2 April. Its issue price was E1.55 per share, valuing the company at E1.147bn. This issue came at the lower end of the indicative flotation price range of between E1.48 and E1.75 and was over-subscribed by 2.5 times, according to Reuters. Eircom is raising E300m in new equity, and the issue also involves a secondary offering of E531m of shares held by Providence Equity Partners, Soros Private Equity and Lionheart Ventures. The IPO will change the ownership structure, with Providence Equity Partners, Soros Private Equity and Lionheart Ventures reducing their equity stakes in the business substancially. The Employee Share Ownership Trust (ESOT) was allocated E85m worth of shares to maintain its 29.9% stake in the business. The ESOT holds E330m worth of ordinary shares and E174m worth of preference shares. Directly following the public-to private in 2001 the equity stakes in the newco were as follows: Providence Equity Partners holds 46%; ESOT held 29.9%; Soros Private Equity Partners held 18%; Tony O'Reilly held 5% and Goldman Sachs held 1.5%. Eircom, which was founded in 1984, is the principal provider of fixed-line telecommunication services in Ireland. According to quarterly data published by the Irish telecommunications regulator, it had a market share throughout the three years ended 31 December 2003 of approximately 80 per cent of the Irish fixed-line market, based on turnover.

Previous funding

The public-to-private buyout of eircom, by the Valentia consortium completed on 16 November 2001. The Valentia consortium, consisting of Tony O'Reilly of Lionheart Ventures, Providence Equity Partners and Soros Private Equity Partners, made an offer which was declared unconditional with respect to all conditions on 2 November 2001. The total deal value was E3.0137bn and the funding split was 70% debt and 30% equity. On the debt side, Goldman Sachs and Deutsche Bank were joint bookrunners and Goldman Sachs, Deutsche Bank, Barclays Bank, Allied Irish Banks and Bank of Ireland were joint lead arrangers.