UPDATE 1-Wind announces jumbo bond refinancing package

Fri Apr 4, 2014 4:37am EDT

* Telecom firm tackles legacy senior and PIK debt

* Deal follows amendments to loans and bonds

* Alternative PIK toggle plan not adopted (Adds background on amendments to outstanding debt)

By Robert Smith

LONDON, April 4 (IFR) - Italian telecom firm Wind has announced a 3.75bn-equivalent high-yield bond as part of a long-awaited refinancing of its senior and PIK notes, which it is aiming to price next week.

The bond will be used alongside a 500m cash injection from Wind's owner VimpelCom to refinance Wind's 2.7bn-equivalent 11.75% 2017 senior notes and 1.3bn-equivalent 12.25% payment-in-kind (PIK) notes, and issued out of its Wind Acquisition Finance S.A vehicle.

One of the key drivers behind the refinancing is that the PIK notes would have to pay their first cash coupon in July if not repaid.

Wind's new financing structure could also lower the barriers for badly needed consolidation in an Italian mobile market ravaged by a year-long price war.

The new bond will carry a seven-year tenor and three-year call protection, and will be split into 1.85bn and US$2.6bn tranches. This tranche split is subject to change, however.

Roadshows start today in New York, according to a banker on the deal, before switching to London on Monday and Tuesday morning. Meetings in continental Europe will be held on Tuesday afternoon, and the bond is expected to price on either Tuesday or Wednesday.

Joint physical bookrunners are Deutsche Bank and Credit Suisse, with global coordinators BNP Paribas, Credit Agricole, and Banca IMI.

Joint lead bookrunners are Barclays, ING, Societe Generale and UniCredit, while Morgan Stanley and Natixis are joint bookrunners.

CLEARING THE DECKS

Wind announced its intention to refinance its debt pile on March 19, and has spent the intervening weeks clearing the decks for the jumbo deal.

It first completed an amend-and-extend on its more than 2bn senior facilities agreement on March 27, and then followed this with a consent solicitation for amendments and waivers to its senior secured bonds.

Wind received the required number of consents for the bond amendments on Thursday, so has wasted no time in bringing its new deal to market.

While the amendments to the loan and bonds primarily allowed for the refinancing, they also inserted portability clauses into both, which allow the debt to stay in place even after a change in company ownership.

Both the senior facilities agreement and senior secured notes can now stay in place under the following conditions: if net total debt is below 4.25x and senior secured leverage below 3x, or if Wind is taken over by a listed company with a greater or equal market capitalisation to VimpelCom, with mobile licences in the EU, Canada, Switzerland and/or the United States.

Vodafone, 3 and Telecom Italia all have greater market caps than VimpelCom.

ALTERNATIVE PLAN

The announcement of the new bond also confirms that Wind has not opted for an alternative refinancing structure it outlined in an investor presentation last month, which would have used more PIK debt.

Under this second plan, following the 500m cash injection, the remaining PIK notes would be refinanced with new PIK toggle notes.

Wind explained that this option could have been used "in case flexibility is required for potential M&A." PIK toggles usually have short one- to two-year call protection, which makes them easier to refinance in the event of a buyout. (Reporting by Robert Smith, Editing by Helene Durand, Julian Baker)

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