A&O closes delayed Telenet purchase

Allen & Overy (A&O) has closed a politically complex financing deal worth e1.25bn (£799.5m) that was delayed by eight months because of a restructuring of the ownership of the buyer.
The firm acted for 11 lead arrangers, including JPMorgan, Merrill Lynch and the Royal Bank of Scotland, in the acquisition by Belgian telecommunications company Telenet of cable television businesses run by Flemish local authorities in partnership with Electrabel, the Belgian energy producer and a distributor of cable television companies.
The e1.25bn covered the acquisition, a e550m (£351.8m) interim loan as well as working capital.
The financing took eight months longer than expected because, at the same time as the financing, Telenet had to be capital restructured after telecoms consultancy Callahan divested part of its 53 per cent controlling stake in the company.
The restructuring itself was also particularly complex due to the diversity of shareholders involved. They included Electrabel, around 22 Flemish local authorities (half of which were in partnership with Electrabel), private equity investors, investment banks and major Belgian venture capital fund GIMV. Electrabel was represented by Baker & McKenzie's Brussels partner Koen Van Haerents.
The other difficulty was that some of the local authorities were both the purchaser, as part owner of Telenet, and the seller, as part owner of the cable businesses.
Peter Bienenstock, the A&O Brussels partner who acted on Belgian aspects of the deal, including due diligence and security structure, said the transaction was particularly complex because of the involvement of local authorities, which gave it a political and cultural dimension. Also, the financial downturn in the telecoms market added its own complex edge. “The banks haven't had very good performing loans and it's difficult to come up with big loans for telecoms,” he said.
Coincidentally, A&O and Brussels firm Loeff Claeys Verbeke agreed to merge in 2001 when both happened to be involved in the so-called 'stage one' of this current deal, involving Callahan's purchase of its controlling interest in Telenet.
A&O banking partner Trevor Borthwick led the UK team for the banks. Callahan was represented by Cleary Gottlieb Steen & Hamilton London finance partner Andrew Shutter and Brussels M&A partner Jean-Louis Joris, as well as by Squire Sanders & Dempsey securities and banking partner John Clapp.