By Robert Smith
LONDON, Jan 27 (IFR) - Ziggo launched the debt financing for
its long-anticipated acquisition by Liberty Global (LGI) on
Monday, opting for an all-loan debt package against the backdrop
of a softening bond market.
Ziggo has mandated banks for a new EUR3.735bn-equivalent
term loan B, according to a banker on the deal. The loan will be
split into euro and dollar tranches, both maturing in January
2022, with 0.75% Euribor and Libor floors.
The proceeds will be used to refinance existing Ziggo debt
as well as financing the acquisition of Ziggo by LGI.
LGI is a frequent issuer in both the high-yield bond and
leveraged loan markets, but has opted for an all-loan deal in
this instance, in contrast to its approach on previous
acquisitions. When LGI acquired German cable firm Kabel BW in
March 2011, for example, it financed the acquisition with a
EUR2.25bn high-yield bond.
The fact the European high-yield bond market has softened in
recent days could have influenced LGI's decision. The iTraxx
Crossover, a synthetic index often used to gauge market
sentiment, was bid as tight as 280bp on Wednesday, but has
widened out to 312bp on Monday morning.
"In the current market this capital structure is one that
works for Liberty," said a banker on the deal.
Ziggo has EUR3.114bn of total debt, according to its latest
financial results presentation. Some EUR1.905bn is senior
secured, split into a EUR405m senior credit facility, a EUR750m
6.125% 2017 bond, and a EUR750m 3.625% 2020 bond. The remaining
EUR1.209bn is accounted for by an 8% senior unsecured 2018 bond.
Ziggo has launched a tender offer to purchase any and all of
the outstanding 3.625% 2020 notes, and has also announced its
intention to redeem any and all of the 6.125% 2017 notes.
Ziggo has also announced an exchange offer on the 8% 2018
notes, under which up to EUR934m will be swapped for an equal
amount of new 8% 2018 paper.
The new Ziggo acquisition debt will "more or less" take out
all of its outstanding debt "over a staged period of time",
according to a source close to the deal, however.
The new loans will not be fully covenant-lite, but will have
just two maintenance covenants covering net senior leverage and
total financial leverage.
The loans are expected to be rated Ba3/BB-. Ziggo's expected
corporate rating is B1/BB-.
Global coordinators are Credit Suisse and Bank of America
Merrill Lynch. Joint bookrunners and mandated lead arrangers are
Credit Suisse, Bank of America Merrill Lynch, ABN Amro, Credit
Agricole, Deutsche Bank, HSBC, ING, JP Morgan, Morgan Stanley
Nomura, Rabobank, Scotiabank and Societe Generale.
Bank meetings in London and New York will be held on
Tuesday, with a February 4 commitment deadline.