Portugal Telecom (PT) has extended the maturity of its largest credit facility – an €800m syndicated bank loan – from March 2014 to July 2016 as part of its new financial strategy.
The Lisbon-based telco said it is now fully financed until the end…
Portugal Telecom (PT) has extended the maturity of its largest credit facility – an €800m syndicated bank loan – from March 2014 to July 2016 as part of its new financial strategy.
The Lisbon-based telco said it is now fully financed until the end of June 2016 and consequently “enjoying a very solid funding position”.
The lead arrangers and bookrunners for the transaction were Bank of America Merrill Lynch, Banco do Brasil, Barclays Capital, BNP Paribas, Citigroup, Mizuho Bank and HSBC.
The size of the syndicated loan was originally €900m.
Last week, PT announced it has adopted a new, more prudent strategy to improve its financial position by reducing debt and improving its debt maturity profile. As part of the strategy, the board of directors has also approved the launch of a public bond offering of at least €250m, a €200m three-year share buyback programme for 2012 to 2014 and a reduced dividend for the same period.
Ratings agency Moody’s today said it views PT’s reduced shareholder remuneration policy and refinancing extension as credit positive, noting that they “alleviate [the company’s] liquidity risk and support its deleveraging efforts”.
The dividend cut represents cash savings of about €900m between 2012 and 2014, which will be used to reduce debt, the agency stated.
PT has debt maturities of about €1.6bn over the next year.
Moody’s highlighted that it will continue to closely monitor the company’s performance in light of negative pressures on the Portuguese economy and the company’s relatively constrained financial ratios.
“Moody’s remains concerned about the fact that Portugal Telecom (i) has only moderate headroom to absorb any increased competitive and/or regulatory pressures in its domestic market; and (ii) faces substantial challenges to restructure its Brazilian subsidiary and place it on a path to sustainable growth,” the agency stated.
