News & Analysis

Mid Europa agrees rare dividend recap(3)

At a time when many banks are proving reluctant to lend, Mid Europa Partners has managed to raise a record debt package to fund a dividend recapitalisation of its investment in T-Mobile Czech Republic.

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Six banks have clubbed together to provide CZK 9.1 billion (€365 million; $473 million) in debt financing to recapitalise Mid Europa Partners’ investment in the Czech Republic arm of telecoms group T-Mobile (known as TMCZ).

The deal will see cash returned to Central and Eastern Europe-focused buyout group MEP and its investors, but the firm maintains its equity position in the business has not been affected, according to a source close to the process. 

The transaction represents one of the largest recapitalisations executed in Europe since the collapse of Lehman Brothers

Mid Europa

In a statement, MEP said: “Net proceeds of the recapitalisation will be distributed to Falcon’s [the MEP-owned holding company for the TMCZ investment] shareholders.”

MEP acquired a 39.23 percent stake in TMCZ in 2006, together with 100 percent of Ceske Radiokomunikace (CRa), a telecom towers subsidiary of TMCZ.

The source indicated the sale of CRa a year ago for about €574 million had reduced the level of debt in the parent company and thus the gearing of MEP’s investment. This recapitalisation had therefore “rebalanced” the capital structure of TMCZ, the source said.

The banking consortium providing the debt comprised Citi, CSOB, Erste Group Bank, ING Bank, Raiffeisen Bank International and Société Générale. CSOB and Erste coordinated the financing package, which could rise to €400 million, MEP said in the statement.

“The transaction represents one of the largest recapitalisations executed in Europe and the largest in Central and Eastern Europe since the collapse of Lehman Brothers in 2008,” the firm said.

Craig Butcher, senior adviser for Mid Europa who is responsible for the investment, said in the statement: “This ground-breaking financing is testimony to Mid Europa’s long-standing banking relationships in the region and its ability to tap local pools of liquidity in spite of challenging credit market conditions”.