STT OFFER COULD MEAN FLOTATION OF EIRCOM BY 2012 - Eircom could be floated on the stock market within the next three to five years as part of the proposed takeover of the business by Singapore-based STT Communications Ltd, writes the Irish Times. This provision is included in the 225 million Australian dollar cash and shares offer made by STT to Sydney-based Eircom Holdings (ERC) - formerly known as Babcock Brown Capital - which was announced yesterday. The initial public offering (IPO) option has been included as a potential exit mechanism for the employee share ownership trust (Esot) and other shareholders who might choose to retain an equity interest in the company as part of STT's takeover. Following the third anniversary of STT's takeover of Eircom, shareholders with a minimum 25% holding in the company would have the right to "request" that the new owner use "reasonable efforts" to facilitate an IPO of Eircom. On the fifth anniversary, shareholders with 10% of the equity would have the right to request an IPO. These timelines would suit the Esot, a staff trust set up at the time of Eircom's original IPO in 1999 to disburse funds to workers in a tax-efficient manner, which is due to be wound up in 2014. The Esot and STT have signed a "co-operation agreement" that will involve the trust rolling over its 35% stake in Eircom into a new entity, a Cayman Islands-based vehicle called Emerald Communications (ECC).
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IRISH HOTEL PRICES SHOW THE BIGGEST FALL IN EUROPE - Dublin is now one of the cheapest places in the world to stay, with average hotel prices plunging 26% so far this year, to an average of less than €80 a night, writes the Irish Examiner. Figures from Hotels.com's hotel price index reveal that Ireland has, in fact, experienced the steepest decline in prices throughout Europe. Galway remains the most expensive city to stay in Ireland, with a hotel room costing an average €110 per night in the first half of this year. According to the hotel booking website, it is actually more expensive to stay a night in Galway than in London, Barcelona, Amsterdam, Rome or Madrid. In Cork, prices plunged 33% compared with a 17% drop globally, the most significant movement in prices seen in the hotel industry in the five years that the index has been published. Ireland's fall is followed by Norway and Austria where prices dropped 24% and 23% respectively. European room rates were down 16% on average with every country experiencing a drop in prices.
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SOLICITOR SMYTH AGREES DEAL TO REMEDY LOAN COVENANT BREACH - Property developer and solicitor Noel Smyth has agreed a deal with his bondholders in order to remedy a loan to value (LTV) covenant breach on a £200m bond, says the Irish Independent. The breach relates to his Alburn development firm, which involves commercial property investments in the UK and the bond is known as a convertible mortgage backed security (CMBS) because it is secured on property assets. Mr Smyth said yesterday that he was pleased with the result, which would mean a repayment of £30m owing on the bond over the next four-and-a-half years, as well as the sell-off of £50m worth of property. Already, €10m has been put into a so-called 'jic' account, which will also be used towards the repayment of the bond. "The deal gives us breathing space over the next four-and-a-half years," he told the Irish Independent. 'It is also a huge confidence boost for us to go the UK and agree a deal with major banks,'' he added.
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BRUSSELS TO PORE OVER MAGNA DEAL - The European Commission is to scrutinise German backing for the takeover of General Motors' European operations amid concern that planned job cuts could be influenced by political factors, hitting plants in the UK and Belgium disproportionately hard, writes the Financial Times. Signalling that she would take a tough line on the issue, Neelie Kroes, EU competition commissioner, said she would look at "the entire context" of €4.5 billion (£3.8 billion) in loan guarantees provided mainly by the German government to back the deal by Magna, the Canadian car parts supplier, to buy a 55 per cent stake in Opel and its UK business Vauxhall. Siegfried Wolf, Magna's co-chief executive, said on Monday that Opel and Vauxhall would have to cut their workforce of more than 50,000 by a fifth within 12 months. More than 4,000 of the 10,500 job cuts would be in Germany, where 25,000 are employed, and the rest elsewhere in Europe. The company has pledged not to close any of four Opel plants in Germany.
