Bloomberg News

Hutchison Said to Make Revised $2.6 Billion Eircom Offer

May 10, 2012

Eircom filed for examinership, an Irish version of bankruptcy protection, on March 30 as it seeks to restructure the 3.8 billion euros of debt accumulated following five ownership changes in the past 13 years. Photographer: Aidan Crawley/Bloomberg

Eircom filed for examinership, an Irish version of bankruptcy protection, on March 30 as it seeks to restructure the 3.8 billion euros of debt accumulated following five ownership changes in the past 13 years. Photographer: Aidan Crawley/Bloomberg

Billionaire Li Ka-shing’s Hutchison Whampoa Ltd. (13) made a revised 2 billion-euro ($2.6 billion) bid for Eircom Group, the Irish phone company in supervised credit protection, according to people with knowledge of the matter.

The formal cash offer by Hutchison’s Three Ireland unit removes a number of conditions that were attached to an initial bid last week, which was rejected by an Irish court-appointed examiner, said the people, who declined to be identified because the details are confidential. The offer for Dublin-based Eircom remains subject to due diligence, said one of the people.

Eircom filed for examinership, an Irish version of bankruptcy protection, on March 30 as it seeks to restructure the 3.8 billion euros of debt accumulated following five ownership changes in the past 13 years. Li, Hong Kong’s richest man, is adding to the more than $31 billion that Hutchison has invested in wireless operations in the past decade, as European companies seek capital to weather the sovereign debt crisis.

“The crisis in Europe makes this a good time for Hutchison to expand its footprint,” said Linus Yip, chief strategist at First Shanghai Securities in Hong Kong. “Hutchison is well- capitalized, and can raise more funds for deals if necessary.”

Hutchison fell 0.8 percent to HK$71.90 at the midday- trading break in Hong Kong. The stock has gained 11 percent this year, compared with the 9.3 percent increase in the city’s benchmark Hang Seng Index.

Eircom has said it supports in principle a restructuring proposal from its first-lien, or most senior, lenders, which would see this creditor class take control of the company.

Blackstone Units

Representatives for Eircom and Three Ireland declined to comment. Michael McAteer, the examiner, didn’t respond to call and text message to his mobile phone. A spokesman for the first- lien lenders wasn’t able to comment.

The first-lien lenders, led by two Blackstone Group LP (BX:US) units, proposed to write off 15 percent of their 2.36 billion- euro net loans, in exchange for full control of the company, two people with knowledge of the matter said in March.

The plan envisages second-lien lenders recovering 35 million euros, or 10 percent, of their loans, with more junior creditors losing virtually all their investment, the people said at the time.

The examiner, who is weighing the first-lien plans, is obliged by Irish creditor-protection laws to consider all offers for the company before signing any agreement with investors.

Orange Austria

Hutchison is stepping up its investments in Europe, where the Hong Kong company agreed to buy wireless carrier Orange Austria this year, and acquired the U.K.’s Northumbrian Water Group Plc in 2011.

The planned purchase of Orange Austria, a deal valued at 1.3 billion euros, may receive approval from the European Union by “mid-year,” Hutchison said this week.

There are opportunities for consolidation in the phone industry in Europe, Hutchison Managing Director Canning Fok said in March.

Hutchison’s 3 Group, which owns phone businesses in Italy, the U.K., Denmark, Sweden, Austria, Australia and Ireland, has made cumulative investments of HK$240 billion ($31 billion), according to an estimate by Morgan Stanley in 2010.

Li’s wealth has increased by $1.2 billion this year to $23.4 billion, ranking him 14th in the Bloomberg Billionaires Index of the world’s richest people.

----With assistance from Mark Lee in Hong Kong. Editors: Kenneth Wong, Garry Smith, Subramaniam Sharma

To contact the reporter on this story: Joe Brennan in Dublin at jbrennan29@bloomberg.net

To contact the editors responsible for this story: Kenneth Wong at kwong11@bloomberg.net; Edward Evans at eevans3@bloomberg.net


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