(Reuters) – Privately-owned Italian telecommunications company Wind Telecomunicazione said it has completed an auction to buy back some of its Payment-in-Kind (PIK) loan at a discounted price.
Opportunistic loan buybacks are becoming more prevalent as indebted companies with extra cash exploit low loan prices and buy back more of their debt.
Wind said it will purchase euro and U.S. dollar denominated PIK loans of approximately 253.7 million euros ($321.6 million) and $1.64 million, respectively, based on a clearing price of 68 percent of face value.
The Dutch auction process carried a floor price of 61 percent of face value and a ceiling of 69 percent of face value for the PIK loan.
The company said the result was in line with its target to reduce overall leverage while offering PIK lenders an opportunity to gain liquidity in current market conditions.
Wind asked its banks to allow it to buy back some of its 1.7 billion euro junior PIK loan, which funded part of the purchase of energy giant Enel’s (ENEI.MI) 26.1 percent stake in Weather Investments.
The company secured a waiver in Oct. 2008 that allowed it to repay its PIK loan ahead of its senior debt and bonds using excess cash on balance sheet.
Wind is owned by Weather Investments, a holding company of Egyptian businessman Naguib Sawiris. Weather Investments sold 1.1 billion euros of its shares to Apax Partners, Madison Dearborn Partners and TA Associates in June last year.
Wind is one of the best performing credits in Europe’s battered leveraged loan market. Its senior B term loans are trading at 87.1 percent of face value, compared to average bids of 65.02 percent of face value, and have climbed 4.9 points since the start of the year, Thomson Reuters LPC data shows. ($1=.7889 Euro) (Reporting by Alasdair Reilly; editing by Simon Jessop)