RLPC-Numericable's SFR buy backed by 16.5 bln euro debt financing

LONDON, April 7 Mon Apr 7, 2014 9:23am EDT

LONDON, April 7 (Reuters) - French cable company Numericable's acquisition of Vivendi's telecom unit SFR is backed by 16.5 billion euros ($22.59 billion) of debt financing, banking sources said on Monday.

Numericable won a fiercely-contested month-long bidding battle against French rival mobile operator Bouygues for SFR on Saturday.

Numericable's offer consists of 13.5 billion euros in cash, a 20 percent stake in the combined entity and a potential milestone payment. [ID: nL6N0MY0VJ]

Private equity firms Cinven and Carlyle also agreed to exchange their combined 35 percent holding in Numericable for cash and shares in Altice.

Barclays, Credit Agricole, Credit Suisse, Deutsche Bank, Goldman Sachs, ING, JP Morgan and Morgan Stanley have underwritten a covenant-lite debt financing to fund Numericable's acquistion.

BNP Paribas is also likely to join the bank group, banking sources said.

Numericable was not immediately available for comment.

The use of covenant-lite financing, which offers investors fewer protections, on such a large deal is a landmark for the European leveraged loan market, which has previously resisted the adoption of the US-style structure.

Numericable's covenant-lite loan follows hard on the heels of the first all-European covenant-lite loan for French veterinary pharmaceutical firm Ceva Sante Animale.

FINANCING PACKAGE

The financing package will be a mix of syndicated loans and bonds, which will be denominated in euros and dollars. The debt has various maturities but has an average maturity of seven years.

The financing includes 11.65 billion euros of funded debt at Numericable and SFR operating company level which will be split between term loan B debt and senior secured bonds and will be sold to fund investors.

As well as the funded debt, a 750 million euro revolving credit has also been included at the operating company level, which is being sold to banks, banking sources said.

The deal also includes 4.15 billion euros of bonds at Altice's holding company level, banking sources said.

Cable group Altice is the holding company of founder Patrick Drahi, Numericable's largest shareholder.

The financing is expected to be launched in a wider selldown to investors this week. The deal is expected to be popular with investors which have excess liquidity due to a lack of new European buyouts in 2014 so far.

Numericable will also launch a rights issue worth up to 4.7 billion euros to help fund its acquisition of SFR, which will be guaranteed by Altice. [ID: nL6N0MY0VJ] ($1 = 0.7303 Euros) (Editing by Tessa Walsh)