Dáil Éireann díospóireacht -
Thursday, 2 Jul 1998

Vol. 493 No. 5

Written Answers. - Employee Shareholding Schemes.

Richard Bruton

Ceist:

108 Mr. R. Bruton asked the Minister for Public Enterprise when the employee shares in Telecom Éireann will issue; when they will be fully conveyed to workers; and the studies she has undertaken or consideration, if any, she has given to the disposal of a further part of the State's shareholding to workers or others. [16770/98]

Minister for Public Enterprise (Mrs. O'Rourke)

The unions in Telecom Éireann are conducting a ballot of their members today on an employee share ownership Plan — ESOP — and I look forward to a positive outcome. The next step will be to finalise the detailed documentation to give legal effect to the ESOP agreement which was reached with the union coalition in Telecom Éireann and to set up the necessary employee share ownership trust — ESOT. It is expected to have this completed over the coming months. Some 9 per cent of shares in the company will be transferred to the ESOT, when established, from the outset on payment to the Exchequer of the agreed price. This will involve £160 million being paid on transfer of the 9.9 per cent shares with the balance of £30 million being paid one year after the IPO date. The agreement provides that this final payment will be reduced on a pro rata basis if the market value of the company is less than £2 billion at the time of the IPO but greater than £1.6 billion. An additional 5 per cent will be transferred to the ESOT on a phased basis as plans for the transformation of the company are achieved and verified.

The ESOT will be raising a £60 million commercial loan to part-fund the purchase of the 9.9 per cent stake. No distribution of shares from this 9.9 per cent stake to individual employees will occur while such shares are encumbered by the loan but, thereafter, all such shares will be eligible for distribution. The agreement also provides that, subject to certain limited exceptions, shares from the 5 per cent stake will be eligible for distribution to employees after not more than five years. Distribution of shares from the trust to individuals will be by way of transfer through an approved profit sharing scheme, to be approved by the Revenue Commissioners, and will be subject to the rules of such schemes.

My Department is currently engaged in the process of selecting financial and legal advisers to assist with next year's IPO for the sale of State shares in Telecom Éireann. A notice seeking such advisers was placed in the Official Journal of the EU and in the national press in May. It is expected that these advisers will be appointed by the end of this month. When the advisers are appointed, I will give detailed consideration to the details of the IPO including such issues as the number of shares to be covered by the offer, its structure and its timing. At this stage, it is anticipated the IPO will take place around mid 1999.