TIM Hellas offers buyout firms second pay-out

Texas Pacific Group and Apax Partners are reportedly refinancing the Greek mobile company for a second time to take a dividend payment, which will take proceeds to more than twice the firm’s original investment.

Texas Pacific Group and Apax Partners, two buyout firms, have abandoned a sale of TIM Hellas, a Greek mobile company, choosing to refinance the business for a second time.

The refinancing, which will take the form of a €1.4bn ($1.9bn) debt issue, comes despite offers from at least three parties: United Arab Emirates-based telecommunications group Etisalat, US buyout firm Providence Equity Partners, and Turkish telecoms company Turkcell, according to Financial News, a UK trade paper.

Other private firms were also believed to have expressed an interest in the business.

However, the paper reported sources close to the situation saying the offers were below the estimated €3.5bn price tag, with a refinancing the more attractive option as it allows the owners to take out a dividend and keep its shares.

If completed, Apax and TPG are understood to have been repaid more than twice their equity investment of less than €400 million, according to the report.

The debt, which will be made up of €1.1 billion of senior notes, €200 million of payment-in-kind notes, a form of high-risk debt, and €100m of floating-rate notes. By using notes rather than bank debt, the sponsors avoid worries about covenants and so can retain flexibility in the business.

Deutsche Bank and JP Morgan are book running the refinancing with Lehman Brothers and Morgan Stanley, the auctioning banks, alongside. Goldman Sachs, JPM and Deutsche handled the first refinancing of TIM Hellas for Apax and TPG in March this year.

That refinancing comprised a €500m payment-in-kind note when the company aleready had nearly €1.5bn of senior debt. It handed Apax and TPG an estimated €380m dividend, and almost completely repaid their equity investment in the company.

Apax and Texas paid Telecom Italia and minority shareholders €1.36bn for an 81% stake in TIM Hellas 18 months ago then bolted on local peer Q-Telecom in October in a €350m deal.