The Eircom European LCDS Auctions relate to settlement of transactions referencing a certain Eircom Obligation (where BCM Ireland Holdings Limited (now known as ERC Ireland Holdings Limited (“Eircom”) is a Reference Entity). Eircom is included in the LevX credit derivative index and is the subject of single-name loan CDS trades.
The circumstances in which an auction will be held are governed by the ELCDS Auction Rules, published by ISDA on 3 October 2008 (the “Rules”). Following the occurrence of a Bankruptcy Credit Event in respect of a Reference Entity (“eircom Limited”) and in accordance with these Rules, the Markit iTraxx LevX Market Makers have voted to hold (i) an auction in respect of Eircom First Lien Loans and (ii) an auction in respect of Eircom Second Lien Loans, (together, the “Auctions”). The terms of the Auctions are contained in the ELCDS Auction Settlement Terms for Eircom First Lien Loans (the “Eircom First Lien Auction Terms”) and the ELCDS Auction Settlement Terms for Eircom Second Lien Loans (the “Eircom Second Lien Auction Terms”) respectively (together, the “Auction Terms”), each of which were published by ISDA on 24 April 2012.
The Auctions are scheduled for 2 May 2012. Markit and Creditex will administer the Auctions. The cash settlement date for Covered Transactions (as defined in each of the Auction Terms) will be 10 May 2012.
Market participants wishing to submit a physical settlement request into the Auctions must submit a valid Customer Physical Settlement Request Letter to their relevant Participating Bidder at or prior to 5:00 p.m. London time on the Business Day prior to the Auction Date. The relevant forms of Customer Physical Settlement Request Letter are linked below.
Deliverable Obligations Subject to a Lock-Up
Participants are reminded that transferees under a Representative Auction-Settled Transaction (a “RAST”) are not obliged to adhere to a restructuring support agreement dated 28 March 2012 (the “Restructuring Support Agreement”). We draw all parties’ attention to the representations that are deemed to be given pursuant to Section 9.2(b) of the 2003 ISDA Credit Derivatives Definitions by a transferor under a RAST to a transferee under a RAST with respect to obligations transferred. This means that any Deliverable Obligations (as defined in each of the Auction Terms) which are subject to a lock-up arrangement pursuant to the terms of the Restructuring Support Agreement which requires adherence by a transferee cannot be delivered in settlement of a RAST.
For the avoidance of doubt, any Deliverable Obligations which are not subject to a lock-up arrangement pursuant to the terms of the Restructuring Support Agreement will be unaffected.
Revolving Facility Excluded from Deliverable Obligations
We understand from the LevX Market Makers that it is unclear if the Revolving Facility is in existence. As such, in the interest of certainty, it has been requested that the Eircom First Lien Auction Terms be amended to exclude the Revolving Facility from the scope of the Deliverable Obligations. Accordingly, the Revolving Facility cannot be delivered in settlement of a RAST.
Further documentation relating to the auction will be added as it becomes available.