Australian ISP TPG Telecom aims to raise A$300m in an institutional placement to partly repay the debt it used to buy local rival iiNet in September. The A$1.56bn takeover inflated the group’s bank debt to A$1.75bn, and increased its gearing to 2.6x pro forma LTM net debt / EBITDA.
Australian ISP TPG Telecom (ASX:TPM) aims to raise A$300m (US$212m) in an institutional placement to partly repay the debt it used to buy local rival iiNet in September.
Macquarie is underwriter and sole bookrunner for the placement of shares, due to be allotted on 18 November, with Petra acting as joint lead manager.
Local reports said the brokers have called for bids from a A$10.25 floor price – a 5.3% premium compared with the last close.
TPG’s A$1.56bn (US$1.1bn) takeover created Australia’s second-largest fixed-line payer behind incumbent telco Telstra (ASX:TLS), leapfrogging previous number two Optus. It inflated the group’s bank debt to A$1.75bn (US$1.2bn) and increased its gearing to 2.6x pro forma LTM net debt / EBITDA.
The group said the placement will help reduce pro forma gearing to 2.2x. It will also support ongoing growth capex projects, such as a recently announced dark fibre partnership with Vodafone Hutchison that will involve the construction of about 4,000km of new lines.
Alongside the underwritten placement, TPG plans to offer eligible shareholders in Australia and New Zealand a non-underwritten share purchase plan. They will be invited to subscribe for up to A$15,000 (US$10.6k) of new fully paid ordinary shares per shareholder.
TPG announced it would buy iiNet in March, but ended up paying about A$500m (US$353m) more than originally planned thanks to a takeover battle with rival ISP M2.
A wave of consolidation has been sweeping through the country’s telecoms sector ahead of the roll-out of NBN, a public-private partnership deploying a range of communications technologies to all its premises.
Australia’s telecoms regulator gave M2 the go ahead for an all-share merger with local player Vocus communication last week. The New Zealand Commerce Commission, however, is seeking market feedback before making a decision after raising preliminary competition issues.