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May, 2011

The Eircom Employee Share Trust (ESOT), which owns 35% of the telco, is in talks with the Department of Finance to extend its tax breaks that are due to expire in 2014, according to The Sunday Times.

The ESOT has paid out more than €800m tax-free to members since its formation in 2001. If it cannot get the extension, it is likely to distribute its remaining cash among the 14,000 members rather than invest €100m into the company.

The company, which announced last week it was seeking to shed 1,000 jobs through redundancies and early retirement, wants to invest €300m in an attempt to pay off €1 billion in bondholder debt. The ESOT would be expected to contribute pro rata but it may refuse to invest unless the tax breaks are extended.

The company, which is majority-owned by Singapore Technologies Telemedia, has debts of €3.8 billion and has said it would likely breach its loan covenants within the next three months.

Noone Casey has acted for many Eircom ESOT members over the years. Do not hesitate to contact us if you have any queries.

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