TalkTalk Founder Pledges £400m Package to Lenders in Refinancing Bid
The founder of TalkTalk, Sir Charles Dunstone, has announced plans to pledge a £400m package to the company’s lenders in a bid to secure their support for a wide-ranging refinancing deal. Sources have revealed that as part of this proposal, TalkTalk has suggested pledging assets such as Virtual1, a wholesaler of high bandwidth services acquired by the company in 2022, to its bondholders and bank lenders.
In addition to this, TalkTalk plans to include the broadband customer base acquired from Shell Energy within the perimeter of the bondholders’ security package. This move, along with the asset pledges, is expected to total around £200m. This will be accompanied by a capital injection of just over £200m from Sir Charles and the company’s other shareholders. The aim of these measures is to extend the company’s repayment obligations until 2027, providing it with much-needed financial breathing space.
Sir Charles, one of Britain’s most successful entrepreneurs, and TalkTalk’s management team have also committed to remaining in their positions until the company’s turnaround plan has been delivered in three years’ time.
These discussions come as TalkTalk seeks to reorganize its borrowings, which currently amount to approximately £1bn. However, it remains uncertain if the bank lenders and bondholders will support the proposed measures.
TalkTalk is one of the UK’s largest broadband providers, with a customer base of nearly four million. If the refinancing deal goes through, the injection of £200m+ from Sir Charles, Toscafund, and Ares Management, along with the asset pledges, will be accompanied by an amend-and-extend agreement with the company’s lenders.
Separate discussions with Macquarie, an Australian banking giant, for a potential investment into TalkTalk’s wholesale network business, PlatformX, are still ongoing and have yet to reach a resolution.
Recent reports have suggested that TalkTalk may be at risk of collapse after warning of potential debt covenant breaches in its annual report. However, the company’s Chief Financial Officer, James Smith, has assured debt investors that discussions are underway to secure new capital investment into the business. He also confirmed that the company’s existing shareholders have committed to providing over £200m in funding to support working capital and operational costs.
TalkTalk and its shareholders are currently in dialogue with the company’s existing lenders, or their advisers, to determine the best way to utilize the new funding. More information about this and other business news can be found on Sky News.
