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BC Partners finalises $16.5bn Intelsat deal

05 февраля 2008

BC Partners will on Monday announce the completion of its $16.5bn purchase of Intelsat, the world’s biggest satellite operator, after reaching a compromise with banks to overcome difficult financing conditions on its biggest ever deal.

The UK-based private equity firm agreed to make concessions on the structure and terms of its $15bn debt package to hold together its syndicate of main banks - Credit Suisse, Bank of America and Morgan Stanley.

BC Partners finalises $16.5bn Intelsat dealThe completion of the Intelsat deal – first agreed in June just weeks before a dramatic contraction of global credit markets – is a boost for BC Partners, as it had been viewed as a possible victim of the credit squeeze.

It follows another setback in the leveraged loan market with the collapse of efforts to syndicate $14bn of the debt used to finance the $27.8bn buy-out of Harrah’s Entertainment, the world’s biggest casino operator.

Raymond Svider, partner at BC Partners, told the Financial Times: “In the current market conditions what you have to do is be very pragmatic and that is what we are doing.”

“There are a number of small technical things you can do to help out the banks in current market conditions without changing the economic terms too much,” he said.

The credit squeeze forced BC Partners to change its plans for financing the deal. Instead of refinancing all the existing debt, the private equity firm and its banks asked existing lenders to roll over their loans to the company.

So far, Mr Svider said $3.7bn of debt had completed the “consent process” needed to waive the change of control clauses that would usually trigger repayment. To achieve this, BC Partners agreed to pay 50 basis points more interest and some extra fees.

There are about $5.4bn of bonds that still require a similar renegotiation, while $1.3bn of older debt has no change of control clauses.

In addition, the three lead banks have agreed to provide a $5bn bridging loan, to inject new financing for the deal until debt market conditions improve, allowing this to be refinanced by issuing bonds.

BC Partners agreed to insert “non-call features” into parts of the debt, guaranteeing that it will not be recouped for a fixed period.

“It is a very painful process, when you are on the yellow line, about to complete a deal with a signed and binding contract for financing that the banks then want to modify,” said Mr Svider.

BC Partners has agreed to sell part of the $1.5bn equity in Intelsat to co-investors, including $250m to Silverlake of the US and about $50m to Unison Capital of Japan.

Источник: Financial Times

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