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Vodafone in talks for Spanish broadband firm Ono

Amy King
27 January 2014

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Vodafone is thought to have approached the private equity backers of Spanish firm Grupo Corporativo Ono, a cable and broadband operator, regarding a potential £7bn offer for the asset.

Ono had expressed interest in a flotation prior to the approach by Vodafone, reports say. However, the company is yet to appoint banks to run the listing.

Vodafone is understood to have made the offer ahead of its annual general meeting tomorrow, following the £84bn sale of its stake in Verizon Wireless.

Ono received a €200m equity injection from its backers Providence Equity Partners, Thomas H Lee Partners, Quadrangle Capital Partners and GE Structured Finance in 2010, according to unquote" data.

The new capital consists of €125m in cash that will be injected into the company immediately via a deeply subordinated payment-in-kind loan. The firm also received the approval of 80% of its 79 senior lenders for a refinancing plan. The remaining €75m was to be held in an escrow account and subject to liquidity tests.

Under the refinancing proposal, senior lenders were asked to approve plans to issue new debt to refinance its €3.6bn loan as the firm moved to head off liquidity and covenant issues that would have arisen in Q2 2010.

In addition, the refinancing plan involved a new forward-start loan facility to meet the company's scheduled amortisations on its €1.8bn A and B tranches of debt. At least 80% of the A and B tranches were moved to the forward-start facility.

At the time of the deal, the company had a total outstanding debt of €3.99bn, including €450m of 2014 bonds.

In July 2005, Providence Equity , JP Morgan Partners, Quadrangle and Thomas H Lee Partners agreed to pay around €1.3bn for a 51% shareholding in Ono. The total value of the transaction was reported as €2.25bn, which included €237m of debt already in the company.

The transaction also saw Ono wholly acquire Auna Tlc, the fixed line and cable business of the Auna Group. The firm signed commitment letters with 16 financial institutions for €3.5bn of financing that enabled the acquisition. The financing was structured as a €3.1bn senior secured facility, a €130m subordinated facility and a €270m high-yield bridge loan. ABN Amro, Calyon, Fortis Bank and Banco Santander were the bookrunners on the senior facilities.

Those that have committed include Ahorro Corporación Financiera, Banesto, Bank of Scotland, Caixa Catalunya, ICO, JP Morgan, Rabobank, RBS, Sabadell Atlántico, Société Générale and WestLB. The €270m subordinated high-yield bridge was fully committed by JP Morgan, RBS and Calyon as bookrunners, and ABN Amro, Fortis Bank and WestLB as mandated lead arrangers.

The €3.1bn senior loan was split into six tranches: five eight-year senior secured tranches totalling €3bn, and a €100m senior secured bank guarantees tranche. The credit facilities had final maturity dates of 31 December 2013 and were set to pay an initial margin of between 225 and 275 basis points over Euribor.