FRANKFURT/NEW YORK (Reuters) – Private equity firm Providence Equity Partners will list German cable television operator Kabel Deutschland on a stock exchange, abandoning its plan of a billion-euro sale to a buy-out firm, three people with knowledge of the matter said.
The listing will lead to a higher valuation of the company than an outright sale, two people with knowledge of the matter told Reuters on Sunday.
Providence, which owns 88 percent of Kabel Deutschland, is optimistic it will succeed with the listing despite several failed share sales last week, one person said.
It plans to generate 1 billion euros from the sale, which it will start preparing in the coming days, a person said.
Initial offers worth as much as 5.5 billion euros were beset by financing problems, an investment banker who declined to be identified had said on Friday.
Junk bonds would play a crucial role in the deal, so the sharp increase in financing costs for them poses a major obstacle, several people close to the matter told Reuters.
At least four private equity houses — Advent, Carlyle, Bain Capital and a consortium of CVC Partners [CVC.UL] and BC Partners [BCPRT.UL] — had bid between 5 billion euros and 5.5 billion euros for Kabel Deutschland, according to sources.
Other shareholders in the business, which has 9 million cable customers in 13 of the 16 German states, are Teachers’ Pension Plan, holding 8 percent, and management with 4 percent.
Providence and Kabel Deutschland declined to comment. ($1=.7410 Euro) (Reporting by Alexander Huebner, Philipp Halstrick in Frankfurt, Megan Davies in New York; writing by Peter Dinkloh; Editing by Tim Dobbyn)