COMMUNICATIONS WORKERS’ Union general secretary Steve Fitzpatrick has told his members that they should not accept a solution to Eircom’s debt problems that would involve more “fancy financial engineering”.
“This is what landed the company in its current predicament, and staff and pensioners have made too many sacrifices for that to occur again,” Mr Fitzpatrick said in an information circular to members issued on Friday.
He set out three criteria that “will have to be applied to judging any proposals that might emerge” as Eircom seeks to restructure its €3.8 billion debts. These are a remediation of the company’s balance sheet “once and for all” to tackle its debts. “We are unlikely to have a second bite of the cherry,” he added.
Mr Fitzpatrick said there must also be a “clear commitment” to investment in Eircom to create a “secure long-term future” for the company. He said there must also be recognition of the “hard cash contributions” made by Eircom staff over the past two years and the “enormous sacrifices” made by pensioners to put the pension scheme on a “sound footing”.
It is understood the CWU is frustrated at the slow restructuring process, under way for months.
Eircom is negotiating with its lenders, shareholders and potential investors about restructuring its debt. It has set a deadline of November 18th for proposals to be received from interested parties. To date, proposals have been formulated by its shareholders – Singapore-based STT and the employee Esop share trust – and second-lien lenders.
It is understood the shareholders are willing to inject about €300 million in equity into Eircom as part of a restructuring deal that would involve lenders writing off a substantial portion of their debt and taking a stake in the company.
Denis O’Brien’s Digicel mobile phone group has also expressed an interest in Eircom.
Mr Fitzpatrick expressed the hope that the employee Esop, which owns about 35 per cent of Eircom, could ensure that any solutions implemented are “fit for purpose”. “I expect the banks and other parties to recognise in this process the enormous savings already accrued to Eircom on the back of workers and pensioners.”
He said this was an opportunity for all parties involved in the restructuring to show that they are not taking Eircom’s staff “for granted”. “We have played our part and that must not and cannot be forgotten,” he said.
Earlier this year, Eircom’s staff agreed to labour savings of €92 million. This included pay cuts of 10 per cent for an 18-month period, changes to work practices and more voluntary redundancies.
