T-Mobile Netherlands BV has confirmed final terms on its €2.4 billion buyout term loan at E+400, with a 0% floor at par, suggesting a yield to maturity of 4.06%. Recommitments are due at 10.30 a.m. London time, Nov. 19, for allocations thereafter.
Earlier today, the facility was upsized from a planned €2 billion and pricing was revised to E+375-400, with a 0% floor, offered at 99.75, versus original terms of E+400 at 99.50.
The transaction carries a margin ratchet of plus or minus 15 basis points linked to environmental, social and governance-related key performance indicators. The covenant-lite facility also has six months of 101 soft call protection.
Morgan Stanley (sole physical), Barclays and Deutsche Bank are joint global coordinators and mandated lead arrangers on the deal. Acting as mandated lead arrangers on the transaction are ABN AMRO, Bank of China, BNP Paribas, Commerzbank, Credit Suisse, ING, Jefferies, KKR CM, Mizuho, MUFG, NatWest, Nomura, Rabobank, RBC, Santander, SMBC, Societe Generale CIB, Standard Chartered and UniCredit.
The deal will support the acquisition of the firm by Apax and Warburg Pincus, while proceeds from the upsizing will be used to reduce other secured debt. At €2.4 billion, the deal is the largest single buyout tranche in European loans since TDC, another telco, syndicated a €2.7 billion facility in May 2018.
The secured and unsecured bonds are expected to follow as soon as the borrower's latest numbers are ready for inclusion in the information memorandum and could emerge within the next couple of weeks, sources say, adding that the timetable has not been pushed into next year. In all, leverage starts at 4.7x net secured and 5.5x net total based on an EBITDA of €682 million, according to sources.
So far, ratings are out at B/B2 (issuer), B/B1 (secured) with a 3 recovery rating and CCC+ (unsecured). The deal values T-Mobile at €4.8 billion for an enterprise value/EBITDA multiple of roughly 7.1x and is funded through €1.1 billion of equity as well as €3.7 billion of debt. Before today's increase, it was expected that the bonds would be split between an €800 million secured piece and a €550 million unsecured portion. A €500 million revolver rounds out the debt.
The sponsors announced their acquisition of the asset from Deutsche Telekom in September. T-Mobile Netherlands is one of the largest providers of telecom services in the Netherlands, offering mobile as well as fixed broadband. The firm is the close No. 2 mobile operator in the Netherlands with a market share of 33%, behind KPN (36%) and in front of VodafoneZiggo (30%), according to data quoted by S&P Global Ratings. The firm merged with Tele2 Netherlands at the beginning of 2019, thereby consolidating the Dutch market to three from four major players and leaving the country's mobile landscape as an "intense but rational competitive environment," according to Ratings. For their part, investors note that Europe is well versed in the telecom sector — not least from VodafoneZiggo — and note that the firm's solid market share, strong cash generation and strong rating profile are more than enough to brush off any concerns over leverage or carve-out risk.
