Valentia Telecommunications is the holding company of eircom, the dominant fixed-line operator in Ireland. The company was purchased in 2001 by a consortium of investors, financed with e2.4bn of investment grade bank debt and e927m of equity.
In July, a fully underwritten e1.4bn new credit facility was arranged and e1bn of high-yield notes were issued, the biggest euro high-yield bond ever and the first European telecom deal since April 2001. The proceeds were used to refinance the existing e2.4bn credit facility and pay a e446m dividend and redeem e66m of preference shares, the biggest ever dividend transaction globally. The refinancing also termed out the company’s existing debt structure and eliminated refinancing risk under the credit facility.
A stand-out feature of this transaction was the fact it was the only one of its kind in Europe where the notes were issued out of the same entity as the bank debt. The notes benefit from the same pari passu guarantees and do not carry a standstill provision. These structural enhancements helped ensure strong demand (three times over-subscription) and aggressive pricing.
