Tele Columbus Is Finalizing Refinancing Plan With Goldman’s Help

Giulia Morpurgo and Claire Ruckin, Bloomberg News

(Bloomberg) -- Tele Columbus AG is finalizing a refinancing proposal envisaging an equity injection from its shareholders, with the help of new adviser Goldman Sachs Group Inc.

The size of the check is being decided between Morgan Stanley Infrastructure Partners and United Internet AG - which own Tele Columbus via vehicle Kublai GmbH - and will need to be approved by creditors too, said people familiar with the matter, who asked not to be identified because the talks are private.

The last draft proposal by Perella Weinberg Partners - which was advising the company before Goldman stepped in - envisaged a €300 million ($322 million) contribution, said one of the people.

Representatives for Goldman Sachs, Morgan Stanley and Perella Weinberg declined to comment. Spokespeople for Tele Columbus and United Internet didn’t respond to a request for comment by Bloomberg News.

The German cable-services provider has been working on its looming debt maturities, while at the same time dealing with a upcoming liquidity shortfall estimated before the end of the year. To address the latter, it obtained a €15 million credit line from an affiliate of Morgan Stanley in July. Moreover, last week it entered into a shareholder loan agreement to cover the funding gap through the end of the year.

At the same time, creditors - which have formed a group advised by Houlihan Lokey Inc. and Milbank LLP - want a healthier balance sheet and liquidity position, as they are being asked to extend €462 million of term loans coming due in October 2024 and €650 million of high-yield bonds maturing in May 2025.

The company and creditors will be looking to strike an agreement before mid-October, when the term loans will become current, said the people familiar.

Tele Columbus is an example of how investors have become pickier about the companies they keep lending to. Private equity firms often have to bring fresh equity to the table to lighten the load of liabilities for the companies they own and show creditors that their incentives align.

The company has been grappling with high operating costs, leading to cash burn as it carries out an ambitious expansion project across Germany. It relied on the financial backing of Morgan Stanley and United Internet to cover these costs.

--With assistance from Luca Casiraghi.