7 de noviembre de 2014 / 16:58 / en 3 años

RLPC-Bankers ready 5 bln euro financings for rival Portugal Telecom bids

LONDON, Nov 7 (Reuters) - Bankers are working on two loan and bond financing packages of around five billion euros (6.21 billion US dollars) backing bids for Portugal Telecom, which is being sold by Brazilian telecom company Oi, banking sources said on Friday.

Telecoms group Altice SA bid 7.03 billion euros for Portugal Telecom earlier this week, which will expand its presence in the region.

Altice, which is controlled by Franco-Israeli billionaire telecoms entrepreneur Patrick Drahi, already owns two small cable companies in Portugal.

Private equity firm Apax is also expected to make a rival bid for Portugal Telecom, either on its own, or by teaming up with buyout firm Bain Capital, the banking sources said.

Apax and Bain declined to comment. Oi, Portugal Telecom and Altice were not immediately available to comment.

Bankers are working on two separate debt financing packages, which both include a mix of leveraged loans and high yield bonds and will be denominated in euros and dollars.

The financings are expected to be four to five times Portugal Telecom’s Earnings Before Interest, Taxes, Depreciation and Amortisation (EBITDA) of approximately 1.1 billion euros, the banking sources said.

Credit Suisse, Deutsche Bank, Goldman Sachs, JP Morgan and Morgan Stanley are financing Altice’s bid for Portugal Telecom, which is expected to total 5 billion euros or more, the bankers said.

Bank of America Merrill Lynch, Barclays and UBS are working on debt financing of around 4-5 billion euros backing a potential bid by Apax, the bankers said.

“The size of the financing means that all markets will be tapped in order to get the best deal, so loans and bonds in different currencies will be considered. This is a pure leveraged finance play,” one of the banking sources said.


A large part of the financing backing Altice’s bid is expected to be raised at the Altice International operating company level, the sources said.

Altice International is able to raise up to three times senior debt and four times total debt to EBITDA, but is able to take on more debt. Its total debt currently stands at 3.8 times, the bankers said.

Some extra debt could also be raised via Altice International’s listed parent, Altice SA. This would be similar to the structure of a 16.8 billion euro-equivalent loan and bond financing in April which backed Numericable’s acquisition of French telecoms firm SFR. Numericable is also an operating company of parent Altice.

“Altice’s structure gives it a myriad of financing options,” a banker close to the deal said.

Most of the financing is likely to be raised in dollars, due to a favourable swap rate, which has encouraged several European cable and telecoms companies to raise funds in the US in recent months.

Last month Unitymedia, which is owned by Liberty Global, opted to raise all of a new 10-year bond in dollars and dropped a planned euro tranche, despite being a wholly German business with euro-denominated cashflows. [ID: nIFR4GXDn1] (1 US dollar = 0.8053 euro) (Additional reporting by IFR’s Robert Smith. Editing by Tessa Walsh)

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