(Updates with company comment in second paragraph.)
Sept. 15 (Bloomberg) -- ERC Ireland Holdings Ltd., parent of Ireland’s largest phone company Eircom, said lenders agreed to overlook debt terms, averting a $5 billion default and paving the way for a debt restructuring.
“The waiver consent provides a necessary period of stability that allows restructuring discussions to take place during the next three months,” Eircom Chief Executive Officer Paul Donovan said in a statement on the company’s website.
The covenant on the maximum amount of debt the Dublin-based borrower has in relation to its cash flow won’t be enforced until Dec. 15, Eircom said. Some 90 percent of senior lenders approved the waiver, a person with direct knowledge of the matter said before the statement. A company spokesman wasn’t available to comment on the result.
The consent agreement “imposes tighter restrictions” including on the company’s disposal of assets, Eircom said.
Eircom began talks with lenders in May after saying a breach was likely. Eircom, saddled with 3.65 billion euros ($5.1 billion) of debt, is struggling to meet loan conditions as austerity measures weigh on its earnings.
The crisis in Ireland’s economy and banking system has magnified the effect of increased competition in fixed-line and mobile services, Eircom said in a statement July 29. Ireland was forced to accept an 85 billion-euro European Union-led bailout last year to prop up its banks after taking over the lenders whose assets were wiped out by real-estate losses.
Eircom’s senior lenders are represented by Alcentra Group Ltd., Avoca Capital Holdings, Deutsche Bank AG, GSO Capital Partners LP, Harbourmaster Capital Management Ltd. and Sumitomo Mitsui Financial Group Inc., Eircom said July 7. They are being advised by Houlihan Lokey.
--With assistance from Dara Doyle in Dublin. Editors: Paul Armstrong
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