Ziggo bond exchange to clear path for new 10-year paper

Wed Jan 29, 2014 7:25am EST

LONDON, Jan 29 (IFR) - Ziggo's exchange of its 2018 senior notes for new paper also offers bondholders the potential to receive new 10-year bonds later this year.

As part of Liberty Global's acquisition debt package, Ziggo has offered holders of its EUR1.2bn 8% 2018 senior notes the ability to exchange into EUR934m of new 8% senior notes also due in 2018.

Agreeing to exchange, however, means that bondholders will receive a guaranteed allocation on a new 10-year non-call five (10NC5) high-yield bond, according to sources.

This 10NC5 bond will only come into existence if and when Liberty's acquisition of Ziggo is closed, which is expected to take six to nine months.

The new 2018 notes should act as placeholders for the 10NC5 bonds, but if the acquisition is not approved, then bondholders would keep the 2018 notes.

The coupon on the 10NC5 paper is scheduled to be set next week, the sources added, meaning that the price will be determined by a similar process to a new bond issue.

"I believe this is the first time this structure has been used," said one of the sources.

The source added that the deal will leave Ziggo with 5x total leverage, while the EUR3.735bn term loan B being raised with put it 4x levered at the senior secured level.

Credit Suisse is the dealer manager and structuring adviser on the exchange.

Global coordinators on the loan package are Credit Suisse and Bank of America Merrill Lynch. Joint bookrunners and mandated lead arrangers are Credit Suisse, Bank of America Merrill Lynch, ABN Amro, Credit Agricole, Deutsche Bank, HSBC, ING, JP Morgan, Morgan Stanley Nomura, Rabobank, Scotiabank and Societe Generale.