Bank of America, ABN Amro and The Royal Bank of Scotland have launched a new term loan for European cable operator UPC that increases the institutional debt from $525 million to $1.125 billion. The new $600 million "H" loan was launched at meetings in L.A. and New York last week. The deal has been rated B1/B by Standard & Poor's. The new facility will be priced at LIBOR plus 3% for 6 months, stepping down to LIBOR plus 2 3/4% when leverage is less or equal to 4 times. Bankers at the leads either declined comment or did not return calls.
"The market is devoid of cable assets, Europe has five or six of them. There's nothing here," one lender said, explaining why UPC is coming to the U.S. As the secondary market waits for the new loan, UPC's "E" tranche saw significant demand trading at 99 3/4-100 1/4. The tranche is trading at a discount and relative value suggests it is cheap compared to the new tranche, another dealer explained. The "E" is priced at LIBOR plus 3% when leverage is equal to 3 1/2 times.
Meanwhile, the scarcity of domestic options has led U.S. investors to turn to Europe in search of ways to satisfy strong appetite for cable names. CableCom, NTL and Telewest Broadband were all active.