LONDON Jan 16 Spanish pizza delivery business
Telepizza is seeking to refinance its circa 575 million euro
($781.69 million) debt pile with its banks, and put a halt to
plans distressed investors holding its junior debt might have
for a full blown financial restructuring, according to bankers
Telepizza, owned by European private equity house Permira,
has seen the price of its junior debt rise steadily over the
last six months as hedge funds jostle to buy into it in the
secondary markets, with the aim of potentially gaining control
of the company through a debt restructuring.
However, a number of the secondary trades currently remain
unsettled as Permira will not sign off on them, one trader said.
Bankers speculate that Telepizza is hoping to keep the hedge
funds at bay while it tries to conduct a refinancing with its
banks, which could see existing leveraged loans repaid at par
and refinanced with bonds.
Banks have already been approached to discuss the
possibility of issuing bonds according to one banking source,
but the market remains sceptical that these bonds are a feasible
"A lot of bonds have got away in this market but Telepizza
doing a bond refi seems quite aggressive," said the banker.
A second banker agreed: "The whole thing sounds impossible.
You might be able to raise a bond to repay the senior debt but
it is not so clear how you would deal with the mezzanine."
Telepizza's debt comprises around 325 million euros of
senior debt, 150 million euros of mezzanine and a 100 million
euro PIK piece.
Its mezzanine debt is currently trading at 59.75 percent of
face value and its second lien debt at 79.38 percent, according
to Thomson Reuters LPC data.
Although the company has been relatively resilient, it has
come under pressure as a result of the broader economic turmoil
and according to advisers a restructuring could be on the cards
if it is unable to refinance its debt.
"The company's EBITDA is just below 7 times which is not a
complete disaster," said a restructuring adviser. "It is not
clear whether it will breach its covenants but clearly they were
put in place at a time when it was thought the business would do
Permira and an investment vehicle Carbal, managed by the
Ballve family acquired Telepizza in 2006 for 926 million euros.
Permira declined to comment and Telepizza could not be
reached for comment.
($1 = 0.7356 euros)
(Editing by Christopher Mangham)