Hungary's Invitel announces cash-pay debt restructuring transactions

By Caroline Salls

Pittsburgh, Oct. 1 - Invitel Holdings A/S announced a series of transactions that would result in Mid Europa Partners Ltd. becoming the controlling shareholder and a deleveraging of the cash-pay debt of Invitel and its subsidiaries, according to a company news release.

"As a result of the transactions, Invitel will have reduced its cash debt-service requirements, enhanced its financial flexibility through the changes to its PIK notes terms and the terms of the senior bank facilities and the company will have reduced its refinancing risk," Invitel chairman Henrik Scheinemann said in the release.

The closing of each transaction is subject to the closing of the other transactions.

According to the release, Mid Europa will acquire 10.8 million Invitel shares, representing 64.6% of the outstanding shares, from TDC A/S for $1 per share.

In connection with the acquisition, Mid Europa will purchase all of TDC's rights and obligations under a €34.1 million subordinated PIK loan, which will be amended to increase the loan by up to €91.4 million, to finance some activities of Invitel subsidiary Magyar Telecom BV.

Invitel said the additional funds will be principally used to fund the purchase or repayment of a portion of the Invitel Group's outstanding debt.

In addition, Hungarian Telecom Finance International Ltd., a company controlled by Mid Europa, will launch a tender offer to purchase €125 million of floating-rate senior PIK notes due 2013 issued by Invitel subsidiary HTCC Holdco I BV and a concurrent consent solicitation by HTCC Holdco I to proposed amendments to the indenture governing the PIK notes.

The purchase is subject to tenders of more than 50% of the principal amount of the PIK notes.

Credit Suisse Securities (Europe) Ltd., BNP Paribas and Calyon will act as joint dealer managers in connection with the tender offer.

Invitel said its debt restructuring will be subject to shareholder approval at a meeting scheduled for Oct. 28.

"Since our previous ownership of one of its component businesses, the group has been transformed through several mergers and acquisitions into today's much larger and more diversified business," Mid Europa senior partner Craig Butcher said in the release.

"Our contemplated investment in the Invitel Group, through the series of transactions announced today, will strengthen Invitel's balance sheet and better enable it to realize the growth potential of several of its core markets."

Invitel is a Hungarian fixed line telecommunications and broadband internet services provider.

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