The €5.9bn loan package backing the public-to-private buyout of Denmark’s TDC redefined the capacity of Europe’s institutional loan market.
In February 2018, a consortium led by Macquarie Infrastructure and Real Assets and Danish pension funds PFA, PKA and ATP made an offer to buy TDC, which valued its equity at €5.4bn.
The debt financed Macquarie’s vision of turning TDC into a utility-like infrastructure company providing open fixed and mobile networks that all telecom operators will be able to use, while scaling down its customer businesses.
“This was a visionary deal that will reshape the telecom sector,” said Mike Masters, managing director at Barclays. ”This deal could change the way we look at the telecom universe in Europe.”
The €7bn loan and bond package funded the share purchases of the take-private deal and refinanced TDC’s existing debt.
The euro and US dollar term loans totalled €3.9bn-equivalent and were the largest post-crisis TLBs completed for a Single B rated company, while the €2.7bn tranche highlighted the growing maturity of Europe’s institutional market as the largest Single B covenant-lite tranche ever raised.
The loan also included a €500m revolver, a €100m super-senior revolver and a €1.4bn-equivalent bridge to bonds. €1bn of existing bonds were also rolled over.
The deal was a non-traditional buyout. Macquarie is aiming to hold TDC for more than 10 years and invest heavily to develop Denmark’s digital infrastructure, establishing the country as a digital leader.
The financing had to serve a wide range of purposes, including a competitive M&A process, a public-to-private buyout that involved a squeeze-out process and required an opco/holdco structure, as well as transformative asset disposals and rapid debt repayment.
Both TLB tranches were priced at 350bp over Libor with a 0% Libor floor and a 99.5 OID and traded well on the break.
The euro TLB raised more than €3bn and was increased to a European record of €2.7bn. The dollar tranche was allocated at €1.2bn-equivalent and more than 120 investors joined both tranches.
“€2.7bn as a single placement in Europe was super and it’s a reference point,” said Charlotte Conlan, EMEA head of high-yield bond and loan syndicate at BNP Paribas.
Selling Maquarie’s vision of the open network concept was the biggest hurdle, along with getting investors comfortable with the transition to a pure Danish infrastructure business via asset sales.
The US$2.6bn sale in mid-July of TDC’s Norwegian business allowed it to repay US$2.3bn of term loans, including all of the dollar debt, leaving an all-euro capital structure.
Barclays and BNP Paribas were global coordinators, while Deutsche Bank, HSBC, Macquarie and Nordea were physical bookrunners and mandated lead arrangers.
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