Talktalk’s crunch negotiations with private equity giant Macquarie over a mooted £450m deal for its wholesale division have stalled, according to reports, as the embattled telecoms provider races to refinance a billion pounds of credit.
The telecoms giant, which was born out of Carphone Warehouse and became one of the UK’s largest broadband providers, had been engaged in negotiations with the Australian investment giant as part of a wider restructuring plan after the company was taken private by founder Sir Charles Dunstone and Toscafund in 2021.
Macquarie was said to be interested in building a controlling stake in the firm’s wholesale telecoms arm – now called PlatformX Communications – in a deal that would have enabled Talktalk to refinance two tranches of credit with looming deadlines.
The most pressing of these is a revolving credit facility – the equivalent of a business’ overdraft – worth £330m that is held by a group of banks and needs to be paid off or renegotiated by November.
The second is the £685m in corporate bonds Dunstone and Toscafund loaded onto the business as part of their deal to take it off the stock market, which mature in February 2025.
Bondholders had identified the Macquarie deal as the lifeline capital injection that would give the telecoms titan the means to refinance these loans which come to maturity in a much less borrower-friendly environment than when they were negotiated.
Macquarie’s interest in PlatformX Communications, which buys cable access from firms such as Openreach and CityFibre and sells it on to broadband providers like Talktalk, was made public in February. It was reported that the firm’s £450m offer would be in return for a 40 per cent of the arm, valuing it at £1.2bn.
But now, with discussions between Talktalk and Macquarie on ice, according to a report in The Sunday Times, Talktalk is said to be focused on securing what is known as an amend-and-extend agreement with the firm’s lending banks, accompanied by a £200m injection from Dunstone and Toscafund.
The deal – which in addition to the injection from its founders is reported to include a pledge of £200m worth of a assets as collateral – would extend its stretch its repayment obligations out to 2027.
The package will reportedly be put to banks and bondholders at a crunch summit on Monday afternoon.
James Smith, Talktalk’s chief financial officer, said: “Funding proposals to refinance the group’s balance sheet are under active discussion.
“We are making constructive progress and are confident of a near term agreement which will ensure the group is well capitalised going forward.”
Macquarie was approached for comment.