(Reuters) – Luxembourg-based satellite TV business M7 is seeking to raise a 355 million euro ($469.5 million) loan to refinance its debt and pay a large dividend to its private equity owners, banking sources said on Friday.
Providence Equity Partners and Airbridge Investments want a dividend recapitalization – a refinancing process that increases a company’s debt to allow a payout. The size of the dividend is likely to total around 300 million euros, bankers said.
Dividend recapitalisations, usually a feature of bull markets, have been on the increase in Europe in 2013 as a lack of merger deals has led sponsors to look at other ways of getting value out of their deals.
In 2007, Providence Equity Partners bought a 50 percent stake from Airbridge in Canal Digitaal in the Netherlands, backed with 250 million euros of debt, according to Thomson Reuters LPC data.
They then expanded the company to include TV Vlaanderen in Flanders, TéléSAT in Belgium, AustriaSat in Austria and CS Link and Skylink for the Czech and Slovak market. The group was branded M7 in 2009.
The refinancing will include a 270 million euro, seven-year term loan B paying an interest margin of 500 basis points (bps) over Euribor, which will be offered with a discount of around 1 percent.
There is also a six-year, 75 million euro term loan A and a six-year, 10 million euro revolving credit facility, both paying 450 bps, bankers said.
BNP Paribas and Deutsche Bank are global coordinators on the deal, with Credit Agricole acting as bookrunner and Mizuho as mandated lead arranger. A syndication process to sell the loan has launched, and a meeting to showcase the deal to other banks and institutional investors is due to take place in London on Tuesday, bankers said.
The refinancing equates to around 4.2 times the company’s expected September earnings before interest, taxation, depreciation and amortisation (EBITDA) of 82.7 million euros.
The business has de-levered significantly from 4.7 times in 2007 to 0.4 times in June 2013 as the company has paid off most of its debt from its large cash flow, bankers said.
Other recent dividend recapitalisations include Coffee and sandwich chain Pret A Manger and energy analysis group Wood Mackenzie.