Eutelsat in E1.3bn refinancing

Eutelsat is to raise E1.3bn through an inaugural bond issue. The satellite operator is issuing E850m of 7-year senior unsecured bonds, while it has also secured a new E450m 5-year senior unsecured revolving credit facility.
Proceeds from the financing…

Eutelsat is to raise E1.3bn through an inaugural bond issue. The satellite operator is issuing E850m of 7-year senior unsecured bonds, while it has also secured a new E450m 5-year senior unsecured revolving credit facility.

Proceeds from the financing are to be used to repay the company’s E650m term loan as well as the E200m that has been drawn down from its existing E650m revolver. Both of these facilities were taken out in November 2004 at the Eutelsat SA op co level and are due to mature in November 2011. As a result of the refi, Eutelsat will extend the maturity of its debt from 2.7 years as of December 2009 to 5.3 years.

Eutelsat’s chief financial officer Catherine Guillouard told SatelliteFinance that having been bolstered by a strong set of half-year results, the company moved quickly to take advantage of favourable market conditions.

Guillouard said: “Firstly we have posted very good results recently and secondly we now have an investment grade rating following the upgrade by Moody’s and Standard and Poor’s at the turn of the year. So we decided to tap the bond market at the first good window available to us. Since the beginning of March the bond markets have been very attractive and so we moved quickly to launch out inaugural bond issue. The operation worked very well.”

The new bonds carry a coupon of 4.125% and are to be issued at 99.232%. Guillouard added that the bond were ‘vanilla’ with no non-call options or specific leverage requirements. The revolver has the same leverage covenant of 3.7x net debt to EBITDA as the previous E650m facility.

The bonds met with strong demand from institutional investors with the order book around 4.5 times oversubscribed at E3.8bn. Guillouard was also pleased with the type of investors in the bonds. “We have added a very nice book of investors both long and old. 37% of the bonds were placed in the UK, 23% in France and 14% in Germany,” Guillouard remarked.

She added that the company carried out roadshows in the UK, Germany and France this week before launching the bond on Thursday. The settlement date for the bonds is March 26.

Guillouard said that despite investor demand, Eutelsat had no need to increase the size of the bond from E850m as it would over finance the company, adding that the revolving credit facility gave it the necessary flexibility if it required any additional finance. She said: “This latest deal was the first step in the diversification of our funding. Before yesterday all our debt was bank debt. It also increases the financial flexibility of the company significantly.”

BNP Paribas, Crédit Agricole, Société Générale and Royal Bank of Scotland acted as joint lead managers and bookrunners to the bonds and as mandated lead arrangers and bookrunners to the new senior revolving credit facility.

Lazard, Nabarro & Hinge and Veil Jourde acted as advisors to Eutelsat, while Latham and Watkins acted as legal advisors to the lead arrangers and bookrunners.

Eutelsat is rated BBB- from S&P and Baa3 for Moody’s.