German cable operator iesy-Hessen could further reduce its planned multi-million euro high-yield bond to help finance its merger with domestic rival ish. The potential for change comes after a greater than expected number of existing shareholders opted to roll their equity interest into the merged entity. The investors include banks and hedge funds.
Apollo Management is a significant private equity player on each side of the merger – it holds 15% of ish as well as a stake in iesy – and after the deal will become either a substantial minority shareholder or a majority shareholder in the merged entity. Existing shareholders were also given the opportunity to roll over their equity stake. Iesy announced the acquisition of ish in March in a deal thought to value the company at around €1.55bn to €1.575bn.
The bond was reduced by €100m earlier this month, to €425m, after iesy launched a €920m add-on to its senior loan. The new facilities comprise a €225m seven-year term loan A, a €250m eight-year term loan B, a €375m nine-year term loan C and a €70m revolver. JP Morgan, Deutsche Bank and Citigroup are leading the financing. Leverage is 4x senior net debt-to-Ebitda and 6.4x in total.
Sources said that at least a further €50m could be shaved off the bond, but stressed that a final decision on whether to reduce the bond has not yet been taken. “More shareholders than expected rolled over their holding, so the funding requirement is now less,” explained one banker.
It was in April that iesy first tried to bring the 10-year, non-call five senior notes to market, but that deal was postponed as market conditions deteriorated.