LONDON, March 28 (IFR) - Ziggo's outstanding bonds fell on
Thursday, weighed by news that cable operator Liberty Global was
buying a 12.65% stake, prompting speculation it might eventually
make a full bid, increasing Ziggo's leverage.
Ziggo, the Netherlands' largest cable operator was last in
the bond market earlier this month with its debut investment
grade secured bond, which is rated Baa3/BBB-.
Those 3.625% March 2020 notes dropped one point to a cash
price of around 100.40, according to Tradeweb, while Ziggo's
high-yield 8% May 2018 issue was also a point lower at 107.50.
Liberty Global, which owns multiple cable companies
including UPC and Telenet, said on Thursday it had bought the
shares in Ziggo for EUR25 apiece from Barclays Capital
Securities, prompting rumour Liberty might bid for the whole
Liberty said in a statement that the acquisition, in a
sector in which it is already involved, was attractive given the
stock's dividend yield of about 7.4%, based on the expectation
that Ziggo would pay EUR370m to investors in 2013.
The share purchase follows a EUR1bn 20% stake sale of the
company by private equity firms Cinven and Warburg Pincus
earlier this week.
That sale left underwriter Barclays holding more than
EUR700m in Ziggo shares, and caused many observers to label it a
Liberty is already involved in a multi-billion pound
acquisition of British cable group Virgin Media - one of the
biggest M&A transactions in Europe since the 2007 financial
On the news of that takeover, Virgin Media's investment
grade 2021 bonds - which had been trading at a cash price of 113
before the acquisition was leaked to the media - dropped to
about 105, on fears that Liberty Global would sharply increase
leverage at Virgin Media.
When the deal was confirmed a day later, the bonds dropped
further to 101, even though senior secured leverage was raised
only modestly to 3.4 times from 3.1 times on a secured basis.