KDG is running an ‘aggressive timeline’ as it looks to ascertain the seriousness of interest from the private equity community for what could be ‘this year’s big deal’, as one TelecomFinance source described it.
The German cable firm has requested that…
KDG is running an ‘aggressive timeline’ as it looks to ascertain the seriousness of interest from the private equity community for what could be ‘this year’s big deal’, as one TelecomFinance source described it.
The German cable firm has requested that indicative bids be submitted by February 8, which should give a clearer indication of whether the rumoured deal value of E5bn can be achieved.
“The deal size would be of that order, it would be this year’s big deal,” said the source familiar with the deal. “This is a strong credit in a mature yet growing market with growth potential in the cable and TV on demand areas.”
Bankers have also told TelecomFinance that they would be interested in backing a deal such as this in the current market although of course the structure of any financing would be of paramount importance.
“I would say that yes, this is the type of deal that we would look to participate in at the moment. It is likely that around a third of the deal would need to be financed through equity and I would expect a bridge loan and a high-yield bond to issue to be involved, a little bit like the Unitymedia deal,” said one banker.
The bank’s financing of the deal could well turn into a big club with Deutsche Bank, JPMorgan, Morgan Stanley and UBS, already lined up for an IPO, all likely to be involved, with some bankers suggesting that a staple financing will be put in place. The IPO remains an option for KDG’s 88% owner Providence, should the size of buyout bids fall shy of expectations.
The idea that a sale would be leveraged at around 5.5 times suggests that this could be one of the biggest LBOs in recent years if it were to go ahead.
Advent, BC Partners, Carlyle and CVC are all expected to submit bids in some form, while Apax and strategic players UPC and Unitymedia are also believed to be observing the situation.
