The proposed project would provide local currency loan of €52.5 million equivalent to finance part of the requirement to complete the acquisition of 100% stake in each of the five cable television businesses of El-Viv Telecom Sp. z o.o. These include Aster City Cable and Warszawskie Sieci Kablowe in Warsaw, Autocom and RTK Autocom in Krakow and ZTK in Zielona Gora (referred to as "Companies" or "El-Viv"). The consortium of private equity investors consists of Hicks Muse Tate and Furst, Emerging Markets Partnership (Europe) and Argus Capital Partners. The new owners will develop the business by improving the cable TV offering and upgrading the network in order to substantially grow the broadband Internet service.
The proposed transaction is mainly aimed at providing acquisition finance to complete the acquisition of El-Viv after the existing parent Elektrim Telekomunikacja decided to divest the business. The key transition impact comes from the project providing a model of successful restructuring to the industry. The sale of the Companies to a group of shareholders who are interested in its further development and value maximisation would have a significant transition impact for the competitive outlook of multi-channel television in Poland as well as positive impact on the Internet and telephony markets. Competitively priced access to broadband Internet service will have a significant positive impact to development of small businesses in Warsaw and Krakow as well as general use of Internet in the residential market. A significant growth in Internet penetration will likely result in competitive pressures to telephony providers to upgrade their networks in order to compete.
El-Viv Telecom Sp. z o.o. is a provider of cable TV and broadband Internet services operating in Warsaw, Krakow and Zielona Gora. El-Viv Telecom Sp.zo.o. is currently 100% owned by Elektrim Telekommunikacja Sp. z o.o., which is in turn owned by Elektrim S.A of Poland and Vivendi Universal, France.
Local currency loan of €22.5 million equivalent. EBRD financing will be a part of €50 million senior debt facility maturing in 2009 provided in Polish Zloty. Other arrangers of the facility are two commercial banks providing total of €27.5 million equivalent in Polish Zloty. The commercial banks will also provide revolving working capital facility in the amount of €2.5 million equivalent in local currency.
€52.5 million equivalent in Polish Zloty.
The project has been screened B/O requiring an environmental analysis of the proposed project. Preliminary due diligence has confirmed that there are unlikely to be any significant environmental issues associated with the project. The Companies have all the necessary permits required for their operations in place and are in compliance with relevant Polish environmental, health and safety standards and requirements. In accordance with the Bank's Legal Agreements, the Companies will comply with all relevant World Bank and national regulatory requirements for its activities including siting, use and disposal of hazardous waste, nature protection, and worker health and safety issues.
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