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RLPC-Telepizza looks to refinance debt and avoid restructuring
January 16, 2014 / 12:00 PM / 4 years ago

RLPC-Telepizza looks to refinance debt and avoid restructuring

LONDON, Jan 16 (Reuters) - 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 and traders.

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 option.

“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 much better.”

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)

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