Eircom owners' cashback caveat over euro fears
Eircom's owners are so worried about a euro break-up that they want a €200m cash-back guarantee before agreeing to put new money into the business.
Eircom's Singapore-based owner is refusing to finance a rescue of the company until it gets a guarantee from lenders that will enable it to recover cash if Ireland is forced out of the euro before the end of 2013, three sources have revealed.
Singapore Technologies Telemedia (STT) have submitted a proposal to lead a restructuring of eircom's €3.7bn of debt. The offer was made more than a week after an extended deadline for proposals to be submitted closed.
STT faces losing control of eircom as the company has breached the terms on its debt.
Crucially, the STT offer includes a surprise clause that would break the restructuring contract if Ireland exits the euro. STT inserted a material adverse change (MAC) into yesterday's restructuring proposal, sources said.
Under the surprise clause STT will not have to pay the second €100m instalment of rescue cash if Ireland is forced to leave the euro before the end of 2013, and cash already invested would be protected.