Bloomberg News

Coditel Refinances LBO as Cable Firms Outperform in Loan Market

November 16, 2011

Nov. 15 (Bloomberg) -- Coditel Holding SA refinanced debt to pay for its buyout by Apax Partners LLP as a surge in demand for cable company loans belies wider market malaise.

The main provider of pay TV and broadband services in the Benelux countries raised 260 million euros ($353 million) of loans last week as actively-traded loans fell 0.34 percent to 86 cents on the euro, according to data from Markit Group Ltd. Cable loans trade at 96 cents on the euro on average.

Concern about the potential break-up of the euro amid fiscal imbalances from Greece to Ireland has driven up borrowing costs for buyouts to 434 basis points more than benchmark rates from 419.8 since July, according to data compiled by Bloomberg. Leveraged loan issuance in the region declined to $200 million in the first two weeks of November, less than half of the $544 million in the same period in 2010.

“Cable is seen as a safe-haven given the macro-economic backdrop due to its stable revenue bases and growth,” said Peter Din, a high-yield analyst at Mizuho Corporate Bank Ltd. in London. “It’s not the cheapest sector, but it is a place where you can put money and sleep at night.”

New lenders to Coditel provided 140 million euros of senior loans and 100 million euros of junior-ranking mezzanine financing, Bloomberg data show. Apax and its fellow investors agreed to increase the equity portion of the buyout financing by 20 million euros, the people said.

Coditel, spun off from France’s Numericable SAS in May, originally planned to sell bonds to repay loans used to fund its buyout by Apax, Deficom Group SA and Altice One. The Luxembourg- based company pulled the bond on July 21 because of volatility.

Crisis Haven

Resilient consumer demand for high-speed internet and video-on-demand has created a haven for investors seeking refuge from the deepening euro-region debt crisis.

Traders have bid up Kabel Deutschland Holding AG’s term loan E due 2018 as much as 3.4 percent to 97.3 percent, Markit prices show. Germany’s biggest cable operator reported the number of phone and Web clients climbed 21 percent in the quarter ending June 30, contributing to a one-step upgrade to BB from Fitch Ratings yesterday. UPC Financing Partnership’s term loan due in December 2017 rose 3.2 percent to 94.667 percent of face value, Markit prices show.

Cable Deals Surge

Cable acquisitions have accelerated this year, with six pending or completed buyouts of European companies worth as much as $8.3 billion, according to data compiled by Bloomberg. That compares to six successful deals worth $845 million over the same period in 2010.

John Malone’s Liberty Global Inc., the world’s second- largest cable operator, has bid 3.16 billion euros for Germany’s Kabel Baden-Wuerttemberg GmbH & Co KG, which will be the largest deal in the industry since Liberty purchased Unitymedia GmbH for 3.5 billion euros in January 2010.

BC Partners’ raised 7.1 billion kronor ($1.1 billion) to buy Swedish cable company Com Hem AB for about 1.8 billion euros in July. Com Hem’s loans, which started trading on Oct. 27, were the only cable-sector credit tracked by Markit to fall, losing 2.25 percent to trade at 95.25 percent of face value on Nov. 10.

Loans of Spanish broadband provider Grupo Corporativo Ono SA rose 1.267 percent to 91.917 percent of face value, according to Markit, even as the country’s 10-year borrowing costs today climbed to 6.275 percent.

Other loans tracked by Markit included in the survey are those of Casema, Numericable, Telenet Group Holding NV and Virgin Media Inc.

“We are generally very bullish on cable as there are a lot of positive underpinnings as European demand for internet video options increases,” said Chris Ucko, an analyst at CreditSights Inc. in London. “We agree with banks that it is an interesting sector to get involved. These companies are performing well in the face of heavy competition, weakness on the consumer side and high unemployment.”

--Editors: Cecile Gutscher, Michael Shanahan

To contact the reporter on this story: Stephen Morris in London at

To contact the editor responsible for this story: Faris Khan at

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