Providence Equity to make 5.2x its money on Masmovil’s recap

Providence Equity Partners will make 5.2x gross multiple on the recapitalization of Spanish telecommunications company Masmovil Group, sources familiar with the deal told Buyouts.

Masmovil will buy back convertible debt from Providence for a total value of 883 million euros ($1 billion), the firm announced April 1. Masmovil will finance the deal with new debt underwritten by Goldman Sachs and BNP Paribas.

Providence also will reinvest 120 million euros at a price per share of 18.45 euros and will remain on the board of directors with an 8 percent stake. The Rhode Island-based private equity firm initially invested $264 million in Masmovil in mid-2016, sources said. The investment came out of Providence Fund VII, which closed in 2012 on nearly $5 billion, they said.

The transaction is part of a refinancing of Masmovil’s existing debt, which will allow the company to finance growth and reduce the company’s overall cost of capital by replacing the high-cost convertible bond with largely low-cost term loan, the firm said in the announcement.

Masmovil Group provides services for fixed line telephone, mobile phone services and internet broadband for home use, companies and operators under its principle brands: Yoigo, Pepephone, MASMOVIL, Lebara y Llamaya.

The recapitalization will be carried out in two tranches. The first will generate approximately 351 million euros to be paid in May 2019 and the second — approximately 533 million euros to be paid in December 2019.

Action Item: Reach Providence Equity in New York at 212-588-6700