* Bond backing SFR buy to roadshow next week
* Details emerge on maturities and pricing
* Deal dubbed "High-yield's Verizon"
By Robert Smith
LONDON, April 11 (IFR) - Numericable and Altice will start
marketing a huge 10bn-equivalent high-yield bond package
backing the acquisition of SFR on Monday, according to a banker
close to the deal.
On Saturday Numericable emerged victorious after a long
bidding war with Bouygues for French telecom unit SFR, which
Vivendi is disposing of. Numericable announced the 6.55bn loan
component of the deal on Wednesday and has been meeting loan
investors throughout this week.
On Monday it will begin meeting bond investors to market
6.04bn-equivalent of bonds at the Numericable operating company
level and 4.15bn-equivalent of bonds at the Altice holding
company level. The tranches will be split into euro and dollars.
JP Morgan is left-lead on the opco bond and Goldman Sachs
left-lead on the holdco bond.
Maturities have not been formally announced and are subject
to change, but most of the debt will be for eight-years. The
opco bond should have five-year, eight-year and 10-year
maturities, according to the banker, while the holdco issue
should be solely eight-years.
The deal's size is virtually unprecedented in the European
high-yield market, and will rapidly eclipse Wind Telecom's
3.75bn-equivalent deal on Tuesday, the previous largest
European high-yield bond of 2014.
Still, demand is expected to be fierce. "Loads of people are
already putting in orders for the deal and it's not even been
formally announced yet," said the banker.
"This could be the Verizon of the high-yield market."
Much like Verizon's US$49bn investment grade bond priced
last year, market sources expect Numericable and Altice will
have to pay up to clear such a large amount of paper.
"Most people are pegging it at a low 6% yield for the opco
and low 8% yield for the holdco," said a high-yield investor.
"The opco could come inside 5% but I don't think it will.
They need to pay us to clear so many billions of bonds in one
Pricing on the holdco bond is complicated by the fact that
it not only sits above Numericable but also sits above Altice
VII. Altice VII is the entity that has raised debt financing
over the past year and contains its cable businesses in Israel,
Portugal, and the French Overseas Territories among others.
The banker said that, as a result, there are a range of
opinions on price and no one is sure quite where final pricing
will end up.
"Wind's deal this week is probably the best comp, and no one
expected that to come as tight as 7%," he added.
PIK TOGGLE OPTION?
The investor argued that as the Altice holdco sits above a
lot of existing debt with the ability to trap cash, then it
would have made more sense to issue a PIK toggle.
PIK toggles are a variation on payment-in-kind notes, which
pay coupons in cash if the issuer can, while leaving it the
option of allowing interest to accrue on the principal if it
"A PIK toggle would have given the company more flexibility,
but it's not needed as they are very comfortable on being able
to pay cash," said the banker.
"A 4bn PIK toggle would be a very difficult deal to sell to
German vehicle parts supplier Schaeffler issued the largest
publicly placed PIK toggle last year, and at 1.5bn-equivalent
this was not even half size of the Altice holdco bond.
The Altice Group is a multinational cable and
telecommunications company with a presence in France, Israel,
Belgium & Luxembourg, Portugal, French Overseas Territories and
(Reporting by Robert Smith, additional reporting by Claire
Ruckin.; Editing by Helene Durand and Sudip Roy)