Bloomberg News

TDC’s Private Equity Owners Trim Back Holdings; Shares Decline

February 21, 2012

Feb. 14 (Bloomberg) -- TDC A/S’s private equity owners raised about 5.6 billion Danish kroner ($982 million) selling stakes in Denmark’s biggest phone company, according to three people with knowledge of the transaction. The stock fell the most in six months.

The investors sold shares at 43.40 kroner apiece, said the people, who declined to be identified as the terms were private. Blackstone Group LP, Permira Advisers LLP, Apax Partners LLP and Providence Equity Partners Inc. were among the firms that sold shares, while KKR & Co. maintained its stake, according to people familiar with the sale.

Private equity firms are using the recent rally in European equity markets to exit older investments and raise cash for new ones, said Huntington Asset Advisors’ Peter Sorrentino. Global buyout firms are currently seeking almost $180 billion from investors, according to Preqin Ltd.

“Capital is starting to flow,” said Sorrentino, a senior fund manager who helps oversee $14.5 billion at Huntington in Cincinnati. “People are starting to feel better about the economy holding together.”

The buyout firms took TDC private six years ago in what was then Europe’s largest leveraged buyout. The sellers offered 128.7 million shares in a sale arranged by Morgan Stanley, according to documents related to the transaction. The price was 4 percent less than Copenhagen-based TDC’s close yesterday.

High Dividends

The group’s stake now stands at about 43 percent of TDC, compared with the 59 percent before the sale. TDC’s owners are luring investors with high dividends as revenue stagnates. The phone company plans to pay a dividend of 2.17 kroner a share next month, bringing the total payment for last year to 4.35 kroner. The Danish company’s annual dividend amounts to about 10 percent of its current share price, more than twice the so- called dividend yield of the Stoxx 600 Europe Index.

While the discount on the shares was “on the low side,” the dividend is attractive, Danske Bank analysts Poul Ernst Jessen and Erik Strandin Pers wrote in a report today.

TDC fell 4.3 percent to 43.28 kroner at 5:06 p.m. in Copenhagen, the biggest drop since August. That pared the market value of the phone company, Denmark’s largest, to 35.7 billion kroner.

Capital Flowing

Last week, TDC reported fourth-quarter earnings that fell short of analysts’ projections, with profit from continuing operations rising to 704 million kroner. TDC has chosen to improve its services rather than match promotions as competitors load more bandwidth into their service offerings, Chief Executive Officer Henrik Poulsen said in an interview then.

TDC said Feb. 3 it expects 2012 revenue to be about 26 billion kroner, which would be the fourth straight year that sales have hovered around that level, according to data compiled by Bloomberg.

TDC said in a statement yesterday that it’s suspending a share buyback program for as much as 750 million kroner, which had been announced Feb. 3. It intends to restart the program once the block sale has been completed.

The rally in European stock markets may make it more attractive for buyout firms to exit their stakes, with the benchmark Stoxx Europe 600 Index rising more than 22 percent since late September through yesterday.

UniCredit SpA’s $9.9 billion rights offer is leading Europe’s stock sales to the best start of the year since 2007. European companies raised a total of $14.3 billion selling shares in the first five weeks, 16 percent more than the year- ago period and the most in five years, Bloomberg data show.

Surging Share Sales

Additional share sales have surged recently, led by the $1.7 billion stock offering in January from Repsol YPF SA, Spain’s biggest oil company. Madrid-based Repsol sold the shares to pursue an exploration drive. Abertis Infraestructuras SA, Spain’s biggest toll-road operator, sold part of its stake in Paris-based satellite company Eutelsat Communications SA for about $1.2 billion.

Buyout funds managed to raise $21.4 billion last quarter, a rebound of 34 percent from the previous quarter and up 46 percent from the fourth quarter of 2010, according to data from the London-based research firm Preqin.

--With assistance from Lee Spears in New York, Adam Haigh in London and Christian Wienberg in Copenhagen. Editors: Julie Alnwick, Chris V. Nicholson

To contact the reporters on this story: Cristina Alesci in New York at calesci2@bloomberg.net; Zijing Wu in London at zwu17@bloomberg.net; Alexis Xydias in London at axydias@bloomberg.net

To contact the editors responsible for this story: Jennifer Sondag at jsondag@bloomberg.net; Jacqueline Simmons at jackiem@bloomberg.net


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