* Favoured bidder Dering hit by funding delays - sources
* French telco consolidation clouds TDF's future revenues
* TDF's owners keen to close sale to repay debt - sources
By Sophie Sassard and Claire Ruckin
LONDON, March 17 Broadcasting masts group TDF
faces a battle to sell its French arm as favoured suitor Dering
Capital struggles to fund its bid and fears mount that
consolidation among the unit's telecoms clients could hit
revenues, sources close to the matter said.
The sale is important for TDF's private equity owners TPG,
Charterhouse and Ardian as they need to raise money to help
repay 3.8 billion euros ($5.3 billion) of debt in order to avoid
a costly restructuring with creditors, the sources said.
The owners may have to cut their price expectations or
postpone the sale and extend their debt agreements with lenders,
they added, speaking on condition of anonymity.
Dering Capital, founded in 2011 by Ben Jenkins, former Hong
Kong head of private equity firm Blackstone, was in
exclusive talks with TDF after it outbid rivals in an auction
last year, offering about 3.7 billion euros for the French unit.
That compared with the sellers' original hopes for 4 billion.
However, Dering missed a deadline for a fully financed bid
in late February and is struggling to raise the equity part of
its offer, the sources said.
Dering managed to secure the debt part of its bid last year
and has since been touring potential investors around the world
to plug the equity gap, courting Asian sovereign funds as well
as African businessmen, said some of the sources.
But the gap is still there and, with uncertainty over TDF's
future revenues, lenders could also start to feel less
comfortable about backing a 3.6-3.7 billion euro deal, some
"I cannot see any bank giving a full commitment to leverage
a business whose revenues and cash flows are unpredictable for
the next three years or so," said one of the bankers.
Charterhouse and TPG declined to comment. TDF, Ardian and
Dering Capital were not immediately available for comment.
The expected consolidation of France's telecoms market,
started by cable firm Numericable's agreement last
Friday to buy mobile operator SFR, one of TDF's main clients, is
fuelling concerns over TDF's future revenues.
Bouygues Telecom, which lost out in a bid battle for SFR, is
now expected by bankers to look at a possible tie-up with Iliad
, the No.4 operator in the French mobile market.
SFR, Bouygues Telecom, Iliad and French market leader Orange
and are all TDF's clients and any consolidation among
them would result in a rationalisation of their telecom towers,
and so potentially less business for TDF which manages and
"It is the worst possible moment for a tower company to sell
when all its clients are considering merging," said a banker
familiar with the sector.
Former bidders, partly anticipating the risk of
consolidation among TDF's clients, had offered less than 3.5
billion euros for the French business, the sources said.
It is possible that some of these infrastructure and pension
funds could come back to take advantage of the challenges being
faced by Dering, as these funds typically eye lower returns than
private equity funds, some of the sources said.
French state shareholder Bpifrance, could also decide to
keep its 24 percent stake in TDF to facilitate a deal with
Dering, some of the sources said. Others believe TDF's owners
should hold off and try for a better deal at a later stage.
"The best thing for TDF's owners would be to put the pen
down and reconsider a sale in 2-3 years when the telecom
environment in France has stabilised," one source said.