LONDON/PARIS Canadian pension fund PSP Investment is making a surprise comeback in the race to buy broadcasting masts group TDF's French unit, opening a new episode in a protracted selloff saga, said three sources familiar with the matter.
PSP Investment is taking advantage of rival bidder Dering Capital's difficulties in financing its bid, which sources previously said came at about 3.7 billion euros ($5.07 billion).
Dering has, however, not thrown in the towel and is still trying to raise more equity for its bid, said one of the sources who asked not to be named because the talks are private.
Dering is now facing competition from one of Canada's largest pension funds and its partner Arcus, an experienced infrastructure fund.
"The exclusivity period (between Dering and TDF) has now expired and there is no formal process going on.", said the same source.
PSP and Arcus expressed interest in buying TDF's French unit last year during the first round of the auction but then walked away because they did not feel they could match the sellers' price expectations, given the uncertainty in the French telecom market.
The renewed appeal for TDF's French business comes in the wake of Vivendi's (VIV.PA) sale of SFR to Numericable, which has given more visibility to investors over the value of the services TDF offers to television groups, radio and mobile operators.
It is reviving hope among TDF's private equity owners TPG, Charterhouse and Ardian of reaching a deal as they need to raise fresh money to repay TDF's 3.8 billion euro debt pile and avoid a costly restructuring.
"Price expectations remain unchanged," said the source.
State-backed Bpifrance is however now expected to keep its 24 percent stake in TDF to facilitate a deal, the sources said.
Until a few weeks ago, people close to the matter thought the deal with Dering was dead, as the investment fund had been touring the world to find investors to fund its bid but was still not bridging the gap.
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 euros ($5.48 billion).
Dering then missed a deadline for a fully financed bid in late February and is struggling to raise the equity part of its offer, raising concerns that TDF's owners would be obliged to renegotiate debt with TDF's creditors, sources had told Reuters in March.
Refinancing has however become a more appealing option now that the debt markets are offering more favorable conditions than last year, said one of the sources.
"The refinancing option is back on the table. If Dering or PSP come with a good-enough offer, there will be a deal, otherwise, they (TDF's owners) will refinance," said the same source.
TDF, declined to comment while TPG, Charterhouse, Ardian, Dering, PSP, Arcus and Bpifrance were not immediately available for comment.
(Additional reporting by Freya Berry in London and Matthieu Protard; editing by Keiron Henderson)