TDF owners weigh 3.5-3.6 billion euros bids for French unit: sources – Reuters

By Sophie Sassard and Matthieu Protard

LONDON/PARIS | Tue Oct 22, 2013

(Reuters) – The owners of broadcasting masts operator TDF are reviewing two bids for the group’s French unit that fell short of their 4 billion euros ($5.5 billion) expectations, said several sources involved with the process.

The sale is important for the owners of TDF – which serves clients including television, radio and mobile phone operators – as they need to raise money to help repay a 3.8 billion euro debt burden in order to avoid a costly restructuring with creditors, the sources said.

TDF has already negotiated with lenders to roll over debt maturities from 2014 to 2016 and extending again would trigger additional fees and higher interest payments, said one of the sources.

A consortium led by Canadian pension fund PSP Investments has offered 3.5 billion euros for TDF France, making it to the second round of the auction, said the sources.

Dering Capital, founded in 2011 by Ben Jenkins, ex Hong Kong head of private equity firm Blackstone (BX.N), is slightly ahead of PSP on price with a bid around 3.6 billion, sources said.

The sellers – comprising private equity funds TPG with 42 percent, Charterhouse Ardian (previously known as AXA private equity) and France’s BPI – are weighing whether to let the two contenders study TDF France’s books, in the hope they will improve their bids, or call off the process, the people said.

People close to TDF have previously said its owners would not sell the French business for less than 4 billion euros, which they see as a low-end valuation assuming EBITDA (earnings before interest, tax, depreciation and amortization) improves to about 380 million euros in 2014 and applying sector price multiples of between 10.5 and 11.5 times that total.

But sources familiar with the bidders are hoping a deal could be agreed with final and fully-financed offers of around 3.5 to 3.6 billion euros.

Dering had expressed concerns to TDF’s owners over possible governance issues for a foreign acquirer, after the French government blocked Yahoo! Inc‘s (YHOO.O) acquisition of video broadcaster Dailymotion. But the owners had given assurances the process will be fair and transparent, the sources said.


Some of the sources however wonder if state-owned BPI could favor fellow institutional investor PSP, one of Canada’s largest pension investment managers with $76.1 billion of assets under management at March 31, 2013, over an Asia-backed private equity fund.

PSP is teaming up to bid for TDF France with European infrastructure fund Arcus, which manages investments worth 12 billion euros including Scotland’s Forth Ports and Portuguese toll road operator Brisa (BRSAY.PK).

New York-based Dering has recently made progress on both debt and equity funding for the bid. “The equity part and the debt are now fully funded”, said a person familiar with the situation. “The equity consortium consists of pre-eminent global investors from Europe, North America and Asia”, said the person who declined to be identified because the talks are private.

France’s BPI has offered to reinvest in the asset if the sale goes through, in order to maintain a French element within TDF France’s shareholding, said the people.

TDF France’s owners were initially hoping to sign a deal early next year, the sources said.

The business has failed to attract more pension or infrastructure suitors eying stable returns because of its dependence on market prices and contract renewals, sector bankers said.

Some potential bidders have also been put off by the risk of government intervention in France, they said.

Industry players American Towers (AMT.N), Crown Castle (CCI.N) and Canadian pension fund CPP had a look at TDF’s French business but have dropped out of the process, the people said.

Talks which started over the summer to sell TDF’s French assets have also stumbled over valuation issues. People close to first shareholder TPG said the fund is ready to call off the sale if offers fall short of its expectations.

Ardian, which owns 18 percent of TDF, also said other options were on the table if the parties could not agree on price.

Some sector bankers not involved in the process however believe deferring a sale would be risky because of sluggish growth in the industry and the need to repay debt and avoid tough negotiations with lenders.

TDF, Dering Capital, PSP Investments, TPG, Ardian and BPI declined comment.

(Editing by David Holmes)

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