BC Partners closes $16.5bn Intelsat deal

The European buyout firm has renegotiated the financing terms of the deal signed in June despite its highly leveraged and aggressively structured package.

European buyout firm BC Partners has completed its $16.5 billion (€11.2 billion) Intelsat deal after persuading the company’s existing lenders to provide some of the financing for the bid, according to a statement.

highly leveraged

BC Partners will acquire the majority of the deal’s $1.5 billion equity stake, of which US buyout firm Silverlake has bought $250 million and Japanese investment firm Unison Capital has taken $40 million, while management has taken an undisclosed stake, according to a source close to the deal.

The financing for the highly leveraged bid, which was signed at the top of the buyout boom in June, was secured despite ongoing turmoil in the debt markets. By contrast the planned financing of the $30 billion buyout of US casino operator Harrah’s Entertainment last week fell through following the turmoil in the debt markets, according to media sources.

The three lead banks for the BC Partners bid, Credit Suisse, Bank of America and Morgan Stanley have provided nearly $5 billion of bridge financing, which is split between $2.8 billion in senior unsecured debt and a $2.16 billion PIK election bridge loan or PIK toggle, which allow lenders flexibility between standard interest repayments and a deferred interest repayment, according to the statement.

The business has completed the $3.7 billion “consent process” needed to waive change of control clauses relating to the deal, the source said. To do so it has persuaded the business’ original lenders to back the deal. This has led to an increase in the pricing of the debt by 50 basis points and additional fees being added to the terms of the debt.

This leaves a remainder of around $6.3 billion in debt. According to UK newspaper Financial Times this is divided between more than $1 billion in debt retained by existing lenders and more than $5 billion of bonds that still require renegotiation.
The close represents a full exit for the business’ previous owners Apax Partners, Apollo Management, Madison Dearborn Partners and Permira. The four firms could realise a tenfold return on their original investment with the sale to BC Partners, according to news agency Bloomberg last year.