By Tessa Walsh
LONDON, March 16 (Reuters) - Virgin Media on Tuesday entered into a new 2 billion pound ($3 billion) senior loan to refinance and extend the maturity of existing loans from 2012 to 2015, banking sources said.
The loan refinancing is the final element of Virgin's strategy to put a longer-term capital structure in place, bankers close to the deal said. It follows two senior secured bond issues of $1 billion and 875 million pounds in January. .
Virgin Media's new 2 billion loan includes a 1 billion pound term loan A, a term loan B of up to 750 million pounds and an undrawn 250 million pounds revolving credit.
The term loan A and term loan B facilities will be used to repay the company's 1.55 billion existing loans, a banker close to the deal said. The undrawn revolving credit will be used to finance working capital requirements and general corporate purposes, Virgin said.
Virgin launched syndication of the term loan B on Tuesday, after receiving commitments from 10 relationship banks for the 1 billion pound term loan A and the undrawn 250 million pounds revolving credit, he added.
The loans were provided by physical bookrunners Deutsche Bank and BNP Paribas, Bank of America Merrill Lynch, Credit Agricole CIB, GE Capital, Goldman Sachs, J.P. Morgan, Lloyds TSB Corporate Markets, Royal Bank of Scotland and UBS.
"We have already predone the bank piece with 10 relationship banks and are now syndicating to funds," the banker said.
HIGHER PRICING
The term loan A and revolving credit are priced at 350 basis points over LIBOR -- slightly higher than Virgin Media's current borrowing rate of 325 basis points, according to Thomson Reuters LPC data.
The term loan B will be sold predominately to funds and the pricing and the size of the tranche will be based on demand, the banker said.
The term loan B will total at least 600 million pounds and up to 750 million pounds and is expected to yield north of 350 basis points, he added.
A meeting will be held in London on Wednesday for the term loan B syndication and responses are due by March 26.
Virgin Media's senior secured high-yield bonds have performed well and tightened since their issue at 6.72 percent in January.
The bonds, which have a 2018 maturity and a non-call four structure, tightened by 4 basis points overnight to 6.41 percent on Tuesday.
The cost of insuring Virgin Media's debt in the credit default swap market was 340.85 basis points on Monday, down from a high of 1332.93 in October 2008, according to Reuters 3000xtraMarkit data.
Fitch placed Virgin Media's long-term BB- rating on positive watch on Tuesday after the announcement.
"The refinancing of the existing senior secured facilities which would mature in 2015 represents the final stage in Virgin Media's implementation of a longer-dated capital structure," said Michelle De Angelis, Senior Director in Fitch's Leveraged Finance team.
($1=.6670 Pound)
(Reporting by Tessa Walsh; editing by Simon Jessop) Keywords: VIRGINMEDIA LOAN/
(tessa.walsh@reuters.com; +44 20 7542 4048; Reuters Messaging: tessa.walsh.reuters.com@reuters.net)
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