Desmond link to Digifone detailed

Mr Dermot Desmond became involved in the Esat Digifone consortium after he and Mr Denis O'Brien discussed the issue while travelling to a Glasgow Celtic-Liverpool football match in Glasgow on Thursday, August 10th, 1994.

The Esat Digifone bid had been submitted the previous Friday, with 20 per cent of the consortium to be taken up by four institutional investors, according to the bid document.

Mr John Coughlan SC said Mr Desmond had told the tribunal that he and Mr O'Brien discussed the mobile phone licence bid and that Mr O'Brien said that, while he had made a good presentation and had assembled a good team, he was uncomfortable in relation to funding and the fact that he had no binding agreement in relation to it.

Mr Desmond said he proposed that Mr O'Brien would invest in the consortium on the same basis as Telenor, the Norwegian firm involved. Mr Desmond also said he would underwrite Mr O'Brien's bid costs. Negotiations led to an agreement being signed by the two men on September 29th, 1995.

Mr O'Brien said Mr Desmond said he would take up the 20 per cent held for Irish institutions and would underwrite the equity commitments of Mr O'Brien's company, Communicorp.

Mr Desmond, in return, was seeking more than 20 per cent of Esat Digifone and an underwriting fee. Mr Desmond, he said, sought 30 per cent of the consortium.

Mr O'Brien said he thought the fact that the commitments from institutional investors to take a stake in Digifone were not irrevocable was a significant weakness. He spoke to Crédit Suisse First Boston, but the time scale was too tight.

In June 1995 Mr O'Brien approached Mr Desmond when Communicorp needed £5 million. Communicorp was unable to agree terms and eventually borrowed $5 million from Advent International, at a 30 per cent interest rate.

An August 1995 letter from Mr Owen O'Connell, a solicitor for Communicorp, to Telenor, covering the fact that Communicorp did not have irrevocable commitments, said Communicorp did not want to get a stronger deal with Advent International as the indirect costs would be too high.

He said that if Communicorp was not able to pay its way in relation to Esat Digifone, Telenor would be able to source a new partner easily and on better terms.