Numericable Said to Plan $16 Billion Junk Debt for SFR Deal

Patrick Drahi’s $23 billion acquisition of French mobile operator SFR will include about $16 billion of bonds and loans to be raised by Numericable Group SA, according to two people with knowledge of the matter.

The deal, the largest covenant-light financing in Europe, will be offered to investors in euros and dollars, said the people, who asked not to be identified because the matter is private. A group of nine banks, led by Deutsche Bank AG, Goldman Sachs Group Inc. and JPMorgan Chase & Co., are underwriting the borrowing.

Drahi’s Altice SA won the bidding for Vivendi SA’s phone unit, offering 13.5 billion euros ($18.5 billion) in cash and 20 percent of the company that will be created by the merger of Numericable and SFR. Altice, Numericable’s controlling shareholder, has also obtained more than 4 billion euros of debt to fund the deal, it said yesterday.

Charles Fleming, a Paris-based spokesman for Altice at Havas SA, declined to comment on the financing.

Numericable and Altice’s covenant-light debt lacks lender protections such as regular tests capping leverage levels and ensuring sufficient cash flow to cover interest payments, Altice said in the statement. The companies are also raising 950 million euros of credit lines.

Ypso Holding Sarl, a financing unit of Numericable, is rated B1 by Moody’s Investors Service, four levels below investment grade. Moody’s rates Altice B1 while Standard & Poor’s awarded it a BB- rating, one level higher.

Altice plans to boost its ownership in Numericable to about 75 percent from 40 percent by buying shares owned by Carlyle Group LP and Cinven Ltd, it said today.

Before it's here, it's on the Bloomberg Terminal.