Vodafone to replace Unitymedia term loans after closing, bonds later

New York, May 9 – Vodafone Group plc plans to refinance Unitymedia GmbH’s €2.2 billion of term loans “shortly after” closing of the acquisition of the company while the €4.5 billion of outstanding bonds will be retained and refinanced “over time,” according to a news release.

Vodafone announced on Wednesday that it will acquire European cable networks from Liberty Global plc, specifically Unitymedia in Germany and Liberty Global’s operations excluding its direct home business in the Czech Republic, Hungary and Romania.

Vodafone also noted that the transaction will trigger a change of control with respect to Unitymedia’s debt, giving lenders and bondholders the option to put their debt to Vodafone.

The total enterprise value of the transaction is €18.4 billion, made up of €10.8 billion in cash and €7.6 billion of existing Liberty debt.

Financing for the cash element will be made up of €10 billion of new debt facilities, including hybrid debt securities, €3 billion of mandatory convertible bonds and existing cash.

Vodafone said that the acquisition will make it the leading “next generation network” owner in Europe, with 54 million homes connected through cable or fiber and a reach of 110 million homes and businesses.

“We are committed to accelerating and deepening investment in next generation mobile and fixed networks, building on Vodafone’s track record of ensuring that customers benefit from the choice of a strong and sustainable challenger to dominant incumbent operators,” said Vodafone chief executive Vittorio Colao in the news release. “Vodafone will become Europe’s leading next generation network owner, serving the largest number of mobile customers and households across the E.U.”

Vodafone intends to achieve a “solid investment-grade credit rating” from the financing mix.

Its long-term target for its net debt/EBITDA ratio will be 2.5 times to 3.0 times compared with 2.0 times to 2.5 times currently.

Unitymedia has outstanding $900 million of 6 1/8% senior notes due 2025 and €700 million of 3¾% senior notes due 2027.

Subsidiaries Unitymedia Hessen and Unitymedia NRW have outstanding €350 million of 5 5/8% senior secured notes due 2023, €1 billion of 4% senior secured notes due 2025, $550 million of 5% senior secured notes due 2025, €420 million of 4 5/8% senior secured notes due 2026, €500 million of 3½% senior secured notes due 2027 and €475 million of 6¼% senior secured notes due 2029.

Vodafone is a London-based telecommunications company.

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