February 26, 2020 / 4:49 PM / a month ago

Banks struggle to shift €1.8bn of Iliad loans

LONDON, Feb 26 (LPC) - Banks are struggling to shift €1.8bn of loans for French telecom and fibre network operator group Iliad, banking sources said.

The loans were launched to back founder and majority shareholder Xavier Niel’s share buyback, in which he increased his stake in the company to just over 72%.

The loans are being raised at a holding company level, so as not to affect leverage at Iliad’s operating company, where leverage is at around 2.0 times, the sources said.

BNP Paribas, Credit Agricole, Natixis and Societe Generale are leading the corporate leveraged financing, which should have closed for syndication around two weeks ago, sources said.

“The financing is trundling along slowly in the background like a slow train to nowhere. It will get there in the end,” a senior banker said.

The banks have since gone out to a wider group of lenders to try and shift the excess paper.

Iliad was not reachable for comment.

The covenanted-holdco financing is split between a €1.5bn term loan A paying 300bp over Euribor and a €300m term loan B, guided to pay 375bp over Euribor, sources said.

“For most CLO investors the loans are not secured and unrated, which makes them very hard to buy,” a second senior banker said.

A senior investor added: “If it is unrated it just doesn’t work at all and there won’t be a CLO solution for that deal. They need to find a private credit shop with a lot of fire power to take the whole thing at whatever price.” (Additional reporting by Alasdair Reilly; Editing by Christopher Mangham)

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