Germany's Kabel BW shops €2.25 billion equivalent deal, including $500 million tranche

By Paul Deckelman

New York, March 21 - Kabel Baden-Wuerttemberg GmbH was heard by European high-yield market sources to have begun marketing a massive €2.25 billion equivalent four-part bond offering as part of the financing for the German cable operator's acquisition by U.S. billionaire John Malone's Liberty Global Inc.

While the deal is mostly euro-denominated, the sources heard that it will include a $500 million offering of eight-year fixed-rate notes.

There will also be an €850 million tranche of eight-year fixed-rate paper, a €350 million seven-year floating-rate note component, and a €680 million piece of 10-year fixed-rate notes.

Credit Suisse Securities, J.P. Morgan Securities LLC and Deutsche Bank Securities Inc. will be the bookrunners on the Rule 144A/Regulation S deal.

The deal is to be marketed to investors via a short roadshow process Tuesday and Wednesday in Europe, including London, Paris and Frankfurt, and in the United States.

The eight-year notes will have four years of call protection and the 10-years five years of non-callability - but the sources said the seven-year floaters would only have one year of call protection.

This new capital structure will then be assumed by Liberty Global Inc. upon the completion of its acquisition of KBW from EQT Funds for a total consideration of about €3.16 billion, excluding transaction costs.

The acquisition is expected to close in the second half of this year, subject to regulatory approval.

KBW is a Heidelberg, Germany-based provider of television, broadband internet and telephony services.

Liberty Global is an Englewood, Colo.-based cable operator.

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