O2 Czech Republic is considering taking out a loan facility of up to Kc31.8bn (US$1.44bn) to grant financial assistance to controlling shareholder PPF, consolidate its own debt and fund business operations.
O2 CR would borrow from a syndicate of banks…
O2 Czech Republic is considering taking out a loan facility of up to Kc31.8bn (US$1.44bn) to grant financial assistance to controlling shareholder PPF, consolidate its own debt and fund business operations.
O2 CR would borrow from a syndicate of banks or other financial organisations and split the facility between term and revolving loans, the telco’s board of directors said in a report on the financial assistance requested by Petr Kellner’s PPF in October.
The facility would mature in no later than six years after it is first drawn upon.
It would be either in Czech crowns or euros, depending on the commercial benefits of each and the liquidity in the banking loan market.
The board expects the facility would have an interest rate of between 1.35% and 1.75% per annum based on current market conditions.
Final terms and conditions are yet to be negotiated. Shareholders will be asked to approve the financial assistance at a general meeting on 17 December. The board has already decided that it would be in the best interests of the company and its shareholders to grant the financial assistance to PPF.
The Netherlands-based investment firm asked the company for a loan of up to Kc24.8bn (US$1.14bn) in October to help repay the bank debt it took on to acquire a majority stake in the telco.
The board noted: “The company, as a member of a strong PPF’s group, has the opportunity to access the international market of external financing which may offer a better deal, including lower costs …”
O2 CR believes that obtaining the loan under favourable terms and conditions may help it reduce and stabilise its debt servicing costs and obtain cheap funds for future growth.
KPMG concluded in an independent assessment of the board’s report, saying it has not seen anything to support the view that providing the financial assistance would be contrary to O2 CR’s interests.
