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Exclusive: Arqiva mulls £1bn refi ahead of Macquarie exit

The UK telecoms group, whose largest owners are CPPIB, Macquarie and IFM, is in the process of shedding assets to refocus on its infrastructure business.

Winchester-headquartered Arqiva is looking to refinance as much as £1 billion ($1.3 billion; €1.2 billion) ahead of a stake sale by Macquarie Group that could happen next year, according to sources familiar with the telecoms group.

The package would include a £353 million term loan, with the balance made up of drawn and undrawn capex facilities, implying that Arqiva would witness no increase in leverage as a result of the operation. While the deal’s timing remains open, it is expected for Q3 of this year.

Arqiva is owned by a consortium of seven investors, the largest of which are Canada Pension Plan Investment Board (48 percent), Macquarie European Infrastructure Fund 2 (25 percent) and IFM Investors (14.8 percent). Motor Trades Association of Australia holds 5.2 percent, while Health Super Investments has 5.4 percent. A number of small minority holders managed by Macquarie make up the final 1.5 percent.

MEIF2, a €4.6 billion fund that runs until 2018, is said to be willing to exit Arqiva via a dual-track process that would see its holding divested either through an M&A transaction or an IPO. A sale is not anticipated before “well into 2017,” one of the persons said. It remains unclear whether existing shareholders will have pre-emption rights with regards to Macquarie’s stake.

Macquarie, IFM and CPPIB declined to comment. Other consortium members could not be reached for comment before press time.

Arqiva provides infrastructure and broadcast transmission facilities in the UK and Ireland, along with commercial WiFi and smart metering for Scotland and the north of England. It posted revenues of £584.9 million for the year ended 30 June 2015, with EBIDTA 13.7 percent up on the period to £313.6 million, according to its latest annual report.

The company is in the process of exiting small assets which are neither major contributors to sales or profit and do not offer much growth potential, according to sources, with a view to refocusing on its core infrastructure business. Earlier this year, Arqiva sold its payphone business, while it divested its Secure Solutions unit in October 2015.