Millicom International Cellular SA
Millicom Hosts Road Show to Market Its New $500M Senior Notes Due 2025
Tue 10/09/2018 14:49 PM
Millicom International Cellular SA is hitting the road this week and meeting with foreign investors ahead of a proposed new benchmark $500 million, eight-year senior bond issuance, several debt capital market sources said to Reorg. The issuer mandated BNP Paribas, Goldman Sachs, J.P. Morgan and Scotiabank to lead the transaction to market.
The road show commenced on Monday with phone calls to foreign investors and continues today with more investor calls along with meetings in London. Discussions are expected to wrap up on Wednesday with investor calls and talks in New York. The new Reg S/Rule 144a notes will be sold as soon as this Thursday, sources added.
Proceeds from the deal will be used to fund Millicom’s recently announced acquisition of an 80% controlling stake in Panamanian telecommunications services provider Cable Onda. The purchase is expected to help Millicom expand its business to business - or B2B - offering, in part because of Panama’s role as a business hub for the region.
The implied enterprise value for the deal is $1.5 billion, with a cash consideration of slightly more than $1 billion. This translates to an enterprise value/EBITDA multiple of 7.9x fiscal 2019 estimated EBITDA. The deal is expected to close by the end of this year. Cable Onda in the first half of this year reported $195 million in revenue and $83 million of EBITDA.
Millicom previously sold debt capital in Sept. 2017 with a $500 million 5.125% senior bond issue due 2028 priced at par. Funds from the 144a/S notes were used to pay for the partial tender of the issuer’s 6.625% senior bond due 2021. The outstanding 2028 notes have steadily fallen in price since the beginning of this year and last traded this morning at around 91.50 to yield roughly 6.4% based on MarketAxess data. The one-year performance of the outstanding 2028 bond may be viewed below:
Millicom is headquartered in Luxembourg though it operates primarily in Central and South America, where it derives approximately 90% of its total revenue. Through its consumer brand, TIGO, Millicom provides mobile services to about 51 million customers, along with an array of other services including fixed phone, cable and satellite TV, B2B and mobile financial services.
According to Fitch, Millicom has a “much stronger” financial profile compared with regional peers that have diversified telecom services like Cable & Wireless and Digicel, the former of which priced last week a benchmark $500 million 7.5% eight-year, non-call-three senior issuance at par. Millicom reported its second quarter revenue rose 5.5% year over year to $1.54 billion amid an across-the-board increase in the company’s sales categories. EBITDA climbed 4.6% year over year to $551 million, while free cash flow in the opening half of this year reached $229 million. The following is the company’s net debt evolution and debt profile as of June 30:
Millicom is rated Ba2/BB+by Moody’s and Fitch, respectively. The former in a report published on Monday highlighted that its rating for Millicom reflects a “strong operating performance, solid business model, leading market shares in key geographies, and multiregional balance of profit and cash flow generation that have been improving over the last couple of years on a consolidated basis.” Moody’s estimates that the Cable Onda deal will boost Millicom’s indebtedness by around $1.2 billion and lead to an increase, albeit temporary, of pro-forma leverage to 3x. The company has an “adequate” liquidity level, while its debt obligations total $378 million in 2019, $384 million in 2020 and $373 million in 2021.
According to Millicom’s second-quarter earnings release, the company had cash and cash equivalents of about $1 billion at the end of June, or $735 million when accounting for the deconsolidation of the company’s Honduran and Guatemalan businesses and their reclassification as a joint venture since Dec. 31, 2015.
Millicom will publish its third-quarter results at approximately 4 p.m. ET on Oct. 23. The company will hold a corresponding conference call the next day, which may be accessed by clicking here.
The road show commenced on Monday with phone calls to foreign investors and continues today with more investor calls along with meetings in London. Discussions are expected to wrap up on Wednesday with investor calls and talks in New York. The new Reg S/Rule 144a notes will be sold as soon as this Thursday, sources added.
Proceeds from the deal will be used to fund Millicom’s recently announced acquisition of an 80% controlling stake in Panamanian telecommunications services provider Cable Onda. The purchase is expected to help Millicom expand its business to business - or B2B - offering, in part because of Panama’s role as a business hub for the region.
The implied enterprise value for the deal is $1.5 billion, with a cash consideration of slightly more than $1 billion. This translates to an enterprise value/EBITDA multiple of 7.9x fiscal 2019 estimated EBITDA. The deal is expected to close by the end of this year. Cable Onda in the first half of this year reported $195 million in revenue and $83 million of EBITDA.
Millicom previously sold debt capital in Sept. 2017 with a $500 million 5.125% senior bond issue due 2028 priced at par. Funds from the 144a/S notes were used to pay for the partial tender of the issuer’s 6.625% senior bond due 2021. The outstanding 2028 notes have steadily fallen in price since the beginning of this year and last traded this morning at around 91.50 to yield roughly 6.4% based on MarketAxess data. The one-year performance of the outstanding 2028 bond may be viewed below:
Millicom is headquartered in Luxembourg though it operates primarily in Central and South America, where it derives approximately 90% of its total revenue. Through its consumer brand, TIGO, Millicom provides mobile services to about 51 million customers, along with an array of other services including fixed phone, cable and satellite TV, B2B and mobile financial services.
According to Fitch, Millicom has a “much stronger” financial profile compared with regional peers that have diversified telecom services like Cable & Wireless and Digicel, the former of which priced last week a benchmark $500 million 7.5% eight-year, non-call-three senior issuance at par. Millicom reported its second quarter revenue rose 5.5% year over year to $1.54 billion amid an across-the-board increase in the company’s sales categories. EBITDA climbed 4.6% year over year to $551 million, while free cash flow in the opening half of this year reached $229 million. The following is the company’s net debt evolution and debt profile as of June 30:
Millicom is rated Ba2/BB+by Moody’s and Fitch, respectively. The former in a report published on Monday highlighted that its rating for Millicom reflects a “strong operating performance, solid business model, leading market shares in key geographies, and multiregional balance of profit and cash flow generation that have been improving over the last couple of years on a consolidated basis.” Moody’s estimates that the Cable Onda deal will boost Millicom’s indebtedness by around $1.2 billion and lead to an increase, albeit temporary, of pro-forma leverage to 3x. The company has an “adequate” liquidity level, while its debt obligations total $378 million in 2019, $384 million in 2020 and $373 million in 2021.
According to Millicom’s second-quarter earnings release, the company had cash and cash equivalents of about $1 billion at the end of June, or $735 million when accounting for the deconsolidation of the company’s Honduran and Guatemalan businesses and their reclassification as a joint venture since Dec. 31, 2015.
Millicom will publish its third-quarter results at approximately 4 p.m. ET on Oct. 23. The company will hold a corresponding conference call the next day, which may be accessed by clicking here.
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