Moody’s has assigned provisional ratings of Ba3 and B3 to Dutch cableco Ziggo’s new €3.95bn (US$5.33bn) senior secured bank debt and planned issue of notes worth up to €934m (US$1.26bn).
The loans are to help finance Europe-focussed cable giant…
Moody’s has assigned provisional ratings of Ba3 and B3 to Dutch cableco Ziggo’s new €3.95bn (US$5.33bn) senior secured bank debt and planned issue of notes worth up to €934m (US$1.26bn).
The loans are to help finance Europe-focussed cable giant Liberty Global’s (LGI’s) planned leveraged buyout, which values Ziggo at about €10bn (US$13.7bn).
The bank debt consists of €3.3bn (US$4.46bn) in term loan facilities and a €650m (US$889.1m) revolving credit facility, the ratings agency said.
Global coordinators for the loans are Credit Suisse and Bank of America Merrill Lynch. In addition to these two banks, joint bookrunners and MLAs are said to be ABN AMRO, Credit Agricole, Deutsche Bank, HSBC, ING, JP Morgan, Morgan Stanley, Nomura, Rabobank, Scotiabank and Societe Generale.
Utrecht-based Ziggo is reorganising its debt as part of the takeover and has offered to repay or replace about €2.4bn (US$3.24bn) worth of bonds. As part of this, the cableco is offering to exchange up to €934m of its €1.2bn (US$1.64bn) 8% senior notes due 2018 into an equal amount of new 8% senior notes also due 2018.
Credit Suisse is acting as the dealer manager and structuring adviser on this exchange offer
Moody’s noted that, if the takeover closes as planned, the new 2018 notes will be automatically exchanged for notes of the same amount due 2024, to be issued by LGI subsidiary LGE Holdco. Created especially for the Ziggo acquisition, LGE Holdco is expected to become the ultimate holdco for assets within the Ziggo credit pool.
Moody’s highlighted the “significant structural flexibility” of the credit facilities and new notes, adding that for the 2024 notes provide for a potential combination of Ziggo with LGI’s local unit UPC Netherlands.
Announcing its plan to buy the 71.5% stake in Ziggo it does not already own on 27 January, LGI said it would fund the deal with cash and shares. Specifically, the stock component would equate to €3.4bn (US$4.6bn) and the cash component to €1.5bn (US$2.2bn). In addition, LGI said it planned to raise more than €1.5bn in incremental principle debt at Ziggo, taking its leverage ratio to about 5 times.
A few days later, LGI said LGE Holdco had entered into a new senior facilities agreement – the ‘Ziggo Facility’ – to help fund the takeover. The company explained that the facility includes a euro-denominated term loan with an initial commitment of €434m (US$593.7m) and a US dollar-denominated term loan with an initial commitment of zero. In addition, the holdco secured a multi-currency €650m RCF. The Ziggo facility matures on 15 January 2022 and the RCF on 30 June 2020.
LGE Holdco has also entered into a new bridge facility agreement for a €934m (US$1.28bn) term loan. The initial maturity date of this facility is the first anniversary of the utlisiation date but this may be extended, subject to certain condition, for a further 84 months.
Moody’s placed Ziggo’s ratings under review for downgrade after LGI’s planned takeover was announced given its higher debt and expected weakened credit metrics at closing.
