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Capital Markets

Infrastructure: Eircom sale mooted for B&B

Irish divestment would be severe test for weakened loan market.

The rumoured sale of Irish telecoms company Eircom could prompt the refinancing of one of Europe's largest corporates to have undergone a leveraged buyout. BCM, which is managed by Babcock & Brown Capital Management, holds a majority stake (57.1%) in the Irish telecommunications firm. Babcock & Brown itself only has an 8% holding in BCM. Any change in ownership at Eircom could result in the refinancing of Eircom's debt - a $4.6 billion package that was itself refinanced just after the credit crunch seized the debt markets in September 2007.

"BCM is in no way being forced to sell Eircom," explains Anthony Kennaway, head of European communications at Babcock & Brown in London. "Regarding the possible sale of Eircom or Golden Pages, the directors have taken the view that the first issue to be addressed was the management agreement. They have always said that they would assess all opportunities that arise that might be in the best interests of BCM shareholders and to focus on optimising the value of our existing investments."

Babcock & Brown's business has unravelled because of its inability to sell assets. Even if BCM does decide to sell Eircom it could struggle to find a buyer.

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