Five banks have been mandated to arrange the €4bn ($5bn) of debt financing for the private equity acquisition of a 60% stake in French television and mobile phone transmission operator Télédiffusion de France.
BNP Paribas, Citigroup, Merrill Lynch, HSBC and Morgan Stanley are backing Texas Pacific Group and Axa Private Equity in the €3.3bn deal. The remainder of the loan is being used for working capital. It is Europe's fourth-largest leveraged buyout after the private equity-led €7.7bn acquisition of Dutch publisher VNU, according to data provider Dealogic. The €4bn loan will comprise €3.5bn of drawn debt and €500m of undrawn debt, with the total leverage multiple on a pro forma-adjusted basis at 7.78 times earnings before interest, tax, depreciation and amortisation, according to bankers close to the deal. Syndication is expected to begin this year after the buyout has been approved by the national regulator and relevant union bodies. The loan backing Texas Pacific and Axa Private Equity, the sponsor arm of French insurer Axa, comes as rival Kohlberg Kravis Roberts is trying to secure €5bn in loans to support its buyout of French directories business PagesJaunes. France Télécom, which owns PagesJaunes, is selling a 54% stake worth €3.3bn to KKR before it makes a tender offer for the remaining Paris-listed shares. Bankers said the TDF loan may be syndicated ahead of the PagesJaunes financing to prevent demand being stretched. Deutsche Bank, Goldman Sachs, Bank of America, Calyon, JP Morgan, Lehman Brothers and Japanese investment bank Mizuho are lead arranging PagesJaunes' financing, which will take the proportion of debt on its balance sheet to about nine times ebitda â one of the most aggressive leverage multiples recorded in a European leveraged buyout. At nearly eight times ebitda, the gearing for TDF is less aggressive but beats the average multiples of 5.3 times recorded last year, according to Dresdner Kleinwort Investment Bank. Texas Pacific and Axa are understood to have beaten at least four competing bids to buy TDF. The two faced competition from a team comprising Goldman Sachs' private equity arm and French private equity group PAI, while other bidders included a consortium led by Eurazeo, a French private equity firm, Australian bank Macquarie and Spanish infrastructure group Abertis. TDF transmits TV signals and mobile phone calls across the country for all carriers. It is controlled by UK private equity firm Charterhouse Capital Partners and French state investment firm Caisse des Dépôts et Consignations, which will together retain a 40% stake. After the deal has closed, TPG will hold 42% of the company, CDC will hold 24%, Axa Private Equity 18%, Charterhouse 14% and management and employees 2%, compared with 1% before. Charterhouse and CDC previously held a combined 81% stake. They acquired their first shares from France Télécom in 2002 for €1.9bn. France Télécom sold its remaining shareholding to them in 2004 for €390m. TDF recorded turnover of €954m last year, with 86% generated in France.
