EMEA Loan: €10.5bn acquisition financing for TIM's NetCo
Ringing endorsement The landmark €10.5bn financing backing a KKR-led consortium’s €18.8bn acquisition of the fixed network infrastructure assets of Telecom Italia – officially known as TIM – was the standout loan in EMEA in 2024, providing the blueprint for further structural unbundling in the telecoms sector.
Backing the first fixed network spinoff from an incumbent in Europe, the groundbreaking infrastructure financing was the largest telecoms loan in EMEA in 2024 and helped create Italy's primary wholesale fixed broadband provider.
“The deal epitomised the way loan and bond, private and public markets can work together,” said Ilaria Pezzana, responsible for asset-based financing at UniCredit.
“Yes it was infrastructure, yes it was senior secured, but complemented very nicely by the bond market, which well exceeded expectations in terms of appetite from institutional clients to buy into the new NetCo.”
The senior secured financing comprised a €5bn five-year term loan, later reduced to €4bn through a pre-syndication toggle and finalising at an upsized €4.7bn, with a €2bn five-year revolving credit facility, paying initial margins of 225bp over Euribor, stepping up over time to 350bp after four years.
There was also a €3.5bn bridge loan, later increased to €4.5bn, that backed a key element of the transaction – an exchange offer to transfer around €5.5bn of TIM's senior unsecured bonds to the newly created NetCo prior to close.
The bridge loan, which paid an initial margin of 150bp over Euribor, stepping up to a maximum 325bp after 21 months, had an initial maturity of 18 months and two days after first utilisation with an extension option out to 24 months.
The financing was originally underwritten by a group of 11 banks led by global coordinators Credit Agricole, SMBC and UniCredit and subsequently syndicated to 24 banks.
Optics BidCo acquired NetCo for €18.8bn, potentially reaching €22bn with earnouts. The acquisition was also backed by around €10bn of equity from the sponsors, underpinned with a 15-year master service agreement between NetCo and TIM, renewable for another 15 years.
The acquisition completed on July 1 with KKR owning a 38% stake, Abu Dhabi Investment Authority owning 17.5% and Canada Pension Plan Investment Board owing 17.5%. Italian participation in this important strategic asset was assured through the finance ministry taking a 16% stake and F2i with an 11% stake.
The financing provided NetCo with cash to provide a liquidity buffer and to prefund committed capital expenditures.
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