KDG in three-day syndication

Notwithstanding the parlous state of the leverage market, bookrunner Goldman Sachs closed the €650m senior secured loan repack facility for Kabel Deutschland (KDG), including a retail syndication, in just three days.

Despite accusations that the bank had placed the debt with its own funds, the deal was widely syndicated, showing that the market is open if the right investors can be identified.

The deal was mandated on October 22, closed on November 1 and funds the German cable operator’s acquisition of 1.2m in new customers from rival Orion Cable. The deal is structured with a March 2013 final maturity and pays a margin of 325bp over Euribor, with call protection of 101 from signing until March 2009, or for 12 months from the deal signing.

Syndication was completed in two stages, before and after a public announcement of the deal. An initial €475m was allocated to investors at a 35bp discount prior to the deal being publicly announced on October 29, with the €175m balance placed with investors at par between then and November 1.

The deal was syndicated exclusively to funds, some 18 accounts in all, mainly in Europe. The deal was placed with institutional investors despite the possibility that it could remain unfunded for up to seven-and-a-half months depending on German competition clearance.

The deal did cause dismay among some existing lenders because it sees the €650m of new senior debt inserted into the existing KDG capital structure pari passu with existing senior debt and ahead of bond and PIK pieces.

The extra facilities did not require any waiver from existing debt holders because they did not increase senior leverage above a 4x covenant requirement.