Med Telecom

01 February 2002

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Investors

Med Telecom S.A., a portfolio company of GMT Communications Partners, has secured Euro 16m in debt financing from a syndicate of banks led by Ahorro CorporaciÃ³n Financiera. The consortium included Caja de Ahorros del MediterrÃ¡neo (CAM) (which took an equity stake in a previous fundraising round), Caja de Ahorros Provincial San Fernando de Sevilla y Jerez, â€œSa Nostraâ€ Caixa de Balears, Caja general de Ahorros and Banco Popular. The debt is subject to a nine-year loan term with a four-year grace period and capital repayments within the next five years. The debt is priced at Euribor plus 1.9%, potentially reducing to Euribor plus 1.3% depending on the milestones met. The loan is subject to standard covenants.

The financing package, which has a total value of Euro 27m, also includes Euro 2.1m funding from current shareholders, and expansion capital totalling Euro 8.97m predicted for 2002. Once this funding is secured, the debt to equity ratio will be 0.85.

Company

Med Telecom S.A. is a Spanish cable TV/telephony operator, which is led by Luis Torres (chairman), Antonio Rodes (managing director) and Salvador Perez (finance director). Med Telecom operates a fully built broadband cable system in Elche, plus partly built franchises in Alicante and areas of suburban Valencia. The company has been operating traditional cable television networks since the 1980s. Following GMTâ€™s investment in 1997 (when it invested alongside Invercova, the Valencia-based vehicle advised by ING Barings), Med Telecom has developed a telecommunications network in order to take advantage of the deregulated market. The companyâ€™s network provides integrated voice, data, internet protocol (IP) and television services.

Since formally launching â€œtriple playâ€ services in January 2001, Med Telecomâ€™s customer base has grown by 82%. The company has achieved penetration rates of 20% for residential telephony and 5% for internet connectivity. Med Telecom will use the current investment to extend and develop its current fibre optic and coax network in Elche and Alicante, in Southern Valencia. The company is forecast to breakeven within the next two years, generating positive EBITDA in 2002 and bottom line profit in 2003. The company was established in 1987 and employs 160 members of staff.

People

Alberto Cuesta of Ahorro CorporaciÃ³n structured the deal on behalf of the debt providers. (Alfonso Rodriguez Rabadan was appointed to the board to represent CAMâ€™s interests after the bank supplied equity funding in a previous fundraising round). David Baker of Invercova and terrence Tehranian of GMT Comunications Partners were also active in closing this round of debt financing.