By Claire Ruckin and Tessa Walsh
LONDON Jan 4 Shareholders in UK-based broadcast
transmission provider Arqiva have agreed to inject 780 million
pounds ($1.26 billion) of fresh equity to complete a key 3.7
billion pounds loan and bond refinancing, banking sources said
Arqiva's seven shareholders were asked by banks for new
equity to pay down existing debt. This will help the company to
get an investment-grade BBB credit rating and allow it to issue
bonds, the sources said.
The shareholders, which include Canada Pension Plan
Investment Board with a 48 percent holding and Macquarie
European Infrastructure Fund 2 which owns 25 percent, raised
380 million of the 780 million pounds equity injection by not
taking dividends from Arqiva.
"Our shareholders have played a fundamental role in Arqiva's
refinancing and have not taken any distributions since 2009. An
equity contribution of 780 million pounds will support the
company as part of the refinancing," Arqiva spokesman Gary
HSBC and Rothschild are advising on the refinancing.
Arqiva, which says it provides the infrastructure behind
television, radio, satellite and wireless communication in much
of the UK and across large parts of Ireland, mainland Europe and
the United States, was saddled with billions of pounds of debt
at the height of a buyout boom which will start to mature in
The company was created in 2007, when a group of investors
led by Macquarie merged National Grid Wireless with NTL
A large part of the equity injection will repay some
expensive long-dated interest rate swaps, which were put in
place in 2007 and are now 'out of the money', bankers said.
The swaps were designed to hedge against the risk of rising
interest rates. But rates fell to historic lows and companies
that took out the swaps have had to make costly interest
payments that they no longer need.
The equity injection was necessary for the full debt
refinancing to go ahead. It will help Arqiva to get an
investment-grade rating, which it has already applied for, and
issue 500 million pounds of investment-grade bonds.
The 500 million pounds investment-grade bond is necessary
for the rest of the 3.7 billion pounds refinancing to go ahead,
The loan element of the refinancing includes around 1.8
billion pounds of three and five-year senior term loans.
A 500 million pounds loan will cover capital expenditure and
working capital requirements and a 200 million pounds debt
service loan is also included, bankers said.
A 600 million pounds junior loan is also included which is a
bridge loan to a high-yield bond, the bankers said.
Twenty banks have been mandated on the senior and junior
debt and 12 banks have top tier relationship status.
"We are targeting a senior investment grade bond of 500
million pounds and a further holding company bond in the first
quarter of 2013. The remaining 2.5 billion pounds debt is being
raised via bank facilities from a club of banks," Follows said.
Arqiva has revenues of more than 800 million pounds per
annum and employs more than 2,000 people, according to its
Its major customers include the BBC, ITV, Channel 4, Five,
BSkyB, Discovery, CNN, ESPN, Vodafone, O2, Orange, T-Mobile,
mobile provider 3 and the emergency services.