Reuters: Deals: Eircom senior lenders take 15 percent hit in takeover: source

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Eircom senior lenders take 15 percent hit in takeover: source Mar 16th 2012, 18:12 DUBLIN | Fri Mar 16, 2012 2:12pm EDT DUBLIN (Reuters) - Senior lenders set to take over Irish telecoms firm eircom will write off 15 percent of their 2.4 billion euros ($3.1 billion) of debt in a restructuring that will almost halve the struggling company's debts, a source close to the process told Reuters. Laden with debt and suffering from serious under-investment since its privatization in 1999, the former state-owned group risked defaulting on its 3.8 billion euros of borrowings unless a long-sought restructuring deal was agreed. Eircom had said on Wednesday it had decided to support in principle the proposal by representatives of its most senior lenders to restructure that debt pile. Under the proposal, first-lien lenders would take control in exchange for a writedown of 15 percent, while holders of second-lien senior debt, owed around 350 million, will be offered just 35 million euros, or 10 percent, the source said. Holders of around 1 billion euros of lower ranked debt would be virtually wiped out, the source said. Eircom confirmed on Friday that after suspending coupon payments to holders of its lower-ranked, floating-rate notes (FRN) last month, it did not make the payment following a 30-day grace period, which it said constituted a default. The group has 350 million euros of FRN debt. The plan requires the approval of over 50 percent of senior lenders and their support would lead to eircom entering examinership, a form of protection from creditors. This could happen by the end of the month, the source said. A covenant waiver by senior lenders to avert a possible debt default expires on March 31. ($1 = 0.7651 euros) (Reporting by Conor Humphries; Editing by Mark Potter and David Holmes) Link this Share this Digg this Email Reprints

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