Exclusive: France's Iliad sets mid-Oct deadline for T-Mobile US bid - sources

Fri Sep 19, 2014 4:47pm EDT
 
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By Sophie Sassard and Arno Schuetze

LONDON/FRANKFURT (Reuters) - French low-cost telecom operator Iliad has set a mid-October deadline to decide whether to improve its bid for T-Mobile US or walk away as it faces resistance from seller Deutsche Telekom, several people familiar with the situation said.

Deutsche Telekom, which owns 66 percent of the fourth-largest U.S. carrier, has doubts that Iliad will be able to improve the U.S. business since the French startup has no track record in the country, a source close to the German company's management said.

Under the deal structure proposed by Iliad, Deutsche Telekom would have to keep a stake in the combined company.

Iliad is currently in talks with several U.S. banks to help it finance a possible improved bid for T-Mobile US alongside existing lenders HSBC and BNP Paribas, the people familiar with the situation said, after a $33 per share offer for 56.6 percent of T-Mobile US was rejected by Deutsche Telekom.

Chief Financial Officer Thomas Reynaud said Iliad's key leverage ratio would not surpass 4.5 times net debt to earnings before interest, tax, depreciation and amortization (EBITDA). He also said that Iliad would limit any capital increase to fund the T-Mobile bid to 2 billion euros ($2.57 billion).

Iliad is also seeking to team up with private equity funds including KKR to raise about $5-6.5 billion, the sources, who could not be named because the talks are private, said.

T-Mobile US, Iliad and KKR declined to comment. Deutsche Telekom could not be reached immediately for comment.

Iliad's management team has now finished road shows to meet U.S. investors and is waiting to hear back from potential investors, the sources said.   Continued...

 
The logo of French low-cost telecoms provider Iliad is pictured during the company 2013 annual results presentation in Paris March 10, 2014.  REUTERS/Jacky Naegelen