Telefonica Said to Seek Forward-Start Loans, New Credit Line
Telefonica SA is seeking to extend the maturities of debt used by Spain’s largest phone company to fund the acquisition of O2 Plc in 2005, according to three people with knowledge of the situation.
The company is asking lenders to extend 2.1 billion pounds ($3.3 billion) of term loans from the end of this year to 2015. It also wants to extend a a revolving credit from the end of 2013 to 2017, said the people, who declined to be identified because the deal is private.
Telefonica, which is self-arranging the financing, is also adding a new five-year credit line, said the people.
It is offering to pay an initial interest of 215 basis points more than benchmark lending rate for the so-called forward-start deals and an interest margin of 180 basis points for the new revolving credit, said the people. A basis point is 0.01 percentage point.
The company proposes to pay a utilization fee of 15 basis points to start drawing the credit line. The fee will rise to 25 basis points if it uses more than one-third, and 50 basis points to use more than two-thirds, the people said.
Miguel Angel Garzon, a Madrid-based spokesman at Telefonica, declined to comment.
Standard & Poor’s and Fitch Ratings rank Telefonica at BBB+. Moody’s Investors Service rates it Baa1.
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