Published August 16, 2013
Broadcast tower operator Telediffusion de France (TDF) received bids below the 4 billion-euro ($5.32 billion) asking price for its domestic unit, raising concern about its ability to seal a deal and repay debt, said three sources with knowledge of the process.
TDF, which provides services for broadcasting and telecoms companies, is owned by TPG, AXA Private Equity, Charterhouse and French sovereign wealth fund FSI, which had aimed to raise at least 4 billion euros to help repay debts of 3.8 billion euros ($5.04 billion) and avoid a costly restructuring, two of the sources said.
They hoped that a successful disposal of the French unit, which accounts for more than half of TDF's revenues, would pave the way for a sale of TDF's second-largest unit, its German business, according to the sources, who asked not to be named because the talks are private.
TDF owns television and radio masts, as well as satellite and internet operations. Prospective bidders could be hesitating because a recent network sharing deal between two of its clients, Bouygues Telecom and domestic rival SFR, could mean a fall in business, one of the sources said.
A combination of the financial crisis and setbacks in technological advances has hurt TDF's prospects since it was bought in 2006. Commenting this year in its annual report on its debt levels, TDF said: "Our initial business plan from 2006 was based on a number of assumptions that did not all materialize - for example mobile handheld TV, which has still not seen the light of day."
People close to the company have previously said that its owners would not sell the French business for less than 4 billion euros, which they see as the low-end value assuming earning before interest, tax, depreciation and amortization (EBITDA) improved to about 380 million euros in 2014 and applying sector multiples of 10.5-11.5 times EBITDA.
However people on the other side of the negotiation table are less bullish on forecast EBITDA and tend to apply 8-10 sector multiples, they said.
Investment Board (PSP Investments) in a consortium with infrastructure fund Arcus emerged as the most motivated bidders in the first round of the auction that closed last week, the sources said.
They added that others invited to the auction included Ontario Teachers' Pension Plan (OTPP), U.S. mobile tower operators Crown Castle and American Tower as well as infrastructure funds Borealis , Macquarie , AMP Capital and BNP Paribas-backed Antin.
But most did not submit bids last week, and the highest offer was in the area of 3.7 billion euros ($4.90 billion), the sources said.
Private equity fund TPG is TDF's largest shareholder with 42 percent of the equity, followed by France's national investment fund FSI and fellow private equity funds AXA and Charterhouse.
TPG, TDF, FSI and AMP Capital declined to comment. The other parties were not immediately available for comment.
(Additional reporting by Claire Ruckin in London and Matthieu Protard in Paris; Editing by Sophie Walker)