Poland: Solorz-Zak closes LBO, faces financing crunch
|Zygmunt Solorz-Zak faces a question mark over the financing of the Polkomtel deal|
Polish media entrepreneur Zygmunt Solorz-Zak took control of mobile operator Polkomtel last month in a $5 billion buyout, the country’s largest ever. Companies controlled by the tycoon bought 100% of the mobile phone operator from four state-owned Polish firms and the UK’s Vodafone, which owned 24.4%.
However, the impact of the eurozone debt crisis on capital markets has caused delays and probably much higher prices for the final part of the acquisition’s debt financing. Solorz-Zak was still awaiting suitable market conditions to offload a €900 million senior unsecured high-yield bond as Euromoney went to press. A tranche of payment-in-kind notes was also outstanding.
The deal has bridge financing to tide it over, but market volatility since the summer – when the tycoon was declared the winning bidder – has increased the likely all-in price he will pay for the debt.
Crédit Agricole, Deutsche Bank, RBS, Société Générale and local firm PKO Bank Polski (PKO BP) underwrote the debt-financing portion of the deal. Crédit Agricole and Deutsche Bank were coordinating banks, Dewey & LeBoeuf acted as legal counsel to the buyer, and Goldman Sachs and Nomura advised the sellers.
A key part of the financing was a triple-tranche secured loan syndicated to a pool of 30 banks this summer, amounting to some €2 billion. Around 90% of this was zloty financing from local banks, according to a source close to the deal.
Euromoney understands state-owned PKO BP took the biggest share in the debt. "We are the main anchor of the Polkomtel transaction," says Zbigniew Jagiello, PKO BP’s chief executive, in an interview with Euromoney.
The financing situation has been further eased by the EBRD’s decision to put equity into the deal – part of its mandate to support privatization in emerging Europe. It agreed to pay €200 million for a 16.2% stake in Solorz-Zak’s holding company Metelem.
Solorz-Zak, with the deal closed, has stepped in as Polkomtel’s interim CEO. He aims to roll out so-called fourth generation, LTE wireless internet technology in Poland, eventually driving synergies with his TV and media group Cyfrowy Polsat. "In the near future, LTE technology will revolutionize our lives," Solorz-Zak said in a statement.