Mid Europa To Buy Invitel

Mid Europa Partners has agreed to acquire Invitel Holdings AS (AMEX: IHO), a fixed-line telecom and broadband internet services provider in the Republic of Hungary. The deal would involve three separate transactions: Mid Europa would pay $10.8 million to TDC AS for its 64.6% stake in Invitel; Mid Europa would purchase all of TDC’s rights and obligations under a €34.1 million subordinated PIK loan (which would be increased up to €91.4 million); and Mid Europa would launch a tender offer for the outstanding €125 million floating rate senior PIK notes due 2013 (held by Invitel).

Invitel Holdings A/S (NYSE Amex U.S.: IHO) (“Invitel”) announced today a series of transactions that would result in Mid Europa Partners Limited (“Mid Europa”) becoming the controlling shareholder of Invitel and a de-leveraging of the cash-pay debt of Invitel and its subsidiaries (the “Invitel Group”). The closing of each of these transactions is interconditional upon the closing of the other transactions. The series of transactions include the following transactions discussed below:

TDC A/S (“TDC”) and Mid Europa announced today an agreement whereby Mid Europa will acquire from TDC 10,799,782 Invitel shares (64.6% of the outstanding shares, TDC’s entire shareholding), for $1.00 per share (the “Share Acquisition”). The Share Acquisition is subject to certain conditions precedent, including the approval from relevant regulatory authorities. Depending on the status of the regulatory approval at the time of closing of the transaction, TDC and Mid Europa may decide to complete the Share Acquisition in two steps.

In connection with the transactions, Mid Europa will purchase all of TDC’s rights and obligations under a €34.1 million subordinated PIK loan (“Shareholder Loan”), which will be amended and restated to increase the loan by an amount of up to €91.4 million, on terms substantially similar to the existing loan, to finance certain activities of Magyar Telecom B.V. (a subsidiary of Invitel). The additional funds will be principally used by the Invitel Group to fund the purchase or repayment of a portion of the Invitel Group’s outstanding debt.

In addition, Hungarian Telecom Finance International Limited (the “Offeror”), a company controlled by Mid Europa, announced today a tender offer (the “PIK Notes Offer”) to purchase for cash the outstanding €125m Floating Rate Senior PIK Notes due 2013 (ISIN: XS0271778671 (144A), XS0271777947 (Reg S)) (the “PIK Notes”) issued by HTCC Holdco I B.V. (a subsidiary of Invitel) and a concurrent consent solicitation by HTCC Holdco I B.V. to certain proposed amendments to the indenture governing the PIK Notes. The PIK Notes Offer is subject to terms and conditions described in the tender offer and consent solicitation statement (the “Statement”), including the valid tendering of more than 50% of the principal amount of the PIK Notes. The proposed amendments to the indenture governing the PIK Notes are set out in the Statement.

In connection with the contemplated series of transactions set out above, core lending banks under the existing senior debt facility have confirmed their commitment to Invitel by giving their consent to a number of amendments to certain terms and covenants. A number of additional banks have provided financing under the senior facility to secure funding for the Invitel Group going forward.

Credit Suisse Securities (Europe) Limited (“Credit Suisse”), BNP Paribas and Calyon will act as Joint Dealer Managers (the “Dealer Managers”), in connection with the tender offer. BNP Paribas and Calyon acted as Global Coordinators in connection with the Senior and Subordinated Loan Facilities.

Shareholders Meeting

Invitel’s debt restructuring will be subject to shareholder approval at a meeting (the “Meeting”) to be held on Wednesday, October 28, 2009 at 1:00 p.m., local time at Invitel’s principal Hungarian offices located at Puskas Tivadar u. 8-10 in Budaors, Hungary H-2040. The Meeting will be an extraordinary general meeting in accordance with Danish law and Invitel’s Articles of Association. The purpose of the Meeting is to approve the proposed debt restructuring and elect alternate directors to the four directors who currently represent TDC on Invitel’s board of directors. The four alternate directors have been nominated by Mid Europa with the unanimous approval of the current board of directors of Invitel. Following a successful completion of the contemplated transactions, and upon the resignation of TDC’s representatives on Invitel’s board of directors, the four alternate directors would replace the current four directors from TDC. Invitel has set October 6, 2009 as the record date for determining the ADR holders of the Company’s American depositary shares (“ADSs”) entitled to receive a proxy to instruct the Depositary (Deutsche Bank Trust Company Americas) as to the exercise of the voting rights pertaining to the ordinary shares represented by their respective ADSs. TDC has undertaken a commitment to vote in favour of the above mentioned proposed debt restructuring and election of alternate directors.

Comments from Invitel

Commenting on the proposed transactions, the Chairman of Invitel, Henrik Scheinemann, said, “As a result of the transactions, Invitel will have reduced its cash debt-service requirements, enhanced its financial flexibility through the changes to its PIK notes terms and the terms of the senior bank facilities, and the company will have reduced its refinancing risk. Invitel will also welcome a new majority shareholder with deep expertise in the telecom sector and region, replacing TDC, which had previously disclosed its intention to focus on its core markets in Denmark and the Nordic region.”

Comments from Mid Europa Partners

Commenting on the transactions, Craig Butcher, Senior Partner of Mid Europa Partners, said, “We are very pleased to renew our association with the Invitel Group. Since our previous ownership of one of its component businesses, the Group has been transformed through several mergers and acquisitions into today’s much larger and more diversified business. Our contemplated investment in the Invitel Group, through the series of transactions announced today, will strengthen Invitel’s balance sheet and better enable it to realise the growth potential of several of its core markets. Mid Europa Partners looks forward to working with the board and management of Invitel to support its future development for the benefit of all its stakeholders.”


Invitel Holdings A/S is the number one alternative and the second-largest fixed line telecommunications and broadband internet services provider in the Republic of Hungary. In addition to delivering voice, data and internet services in Hungary, it is also a leading player in the Central and Eastern European wholesale telecommunications market.


Mid Europa Partners is a leading independent private equity firm focused on Central and Eastern Europe. Operating from London, Budapest and Warsaw, Mid Europa Partners advises and manages funds with asset value of approximately €3.2 billion. The Mid Europa Partners team has been investing in Central and Eastern Europe since 1999.