Talktalk has agreed the key terms of a refinancing deal which will hand the telecommunications giant a £400m lifeline, it has been confirmed.
The Salford-headquartered company has been in talks with one of its largest shareholders amid warnings it was on the brink of collapse.
Its annual report, which was published in July, revealed that the directors of the private company believed there was a chance that the embattled firm could become insolvent by “August 2024 or sooner”.
The warning came as Talktalk bosses continued their scramble to refinance more than £1bn in outstanding debt, which piled up when the firm was taken private four years ago by its founder, Sir Charles Dunstone, and money manager Toscafund in 2020.
Now Talktalk has agreed the key terms of a deal which involves a group of senior secured notes (SSN) holders, a group of revolving credit facilities (RCF) banks, Ares Management Funds and the company’s major shareholders.
The SSN group and RCF group together represent approximately 60 per cent of the company’s secured debt.
Talktalk to be ‘well funded’ after lifeline agreed
Talktalk said the proposed deal will leave it “well funded to deliver the respective strategic plans of PlatformX Communications (PXC) and Talktalk, continuing to capitalise on their strong positions in the market”.
The business added that its shareholders have also provided £65m of interim funding to the group.
The proposed agreement includes the provision of £170m of funding, in addition to the initial £65m, upon execution of binding lock-up arrangements between the parties.
It also includes the contribution of other assets into the group by its major shareholders and Ares Management Funds, including the Virtual1 business, and the Ovo and Shell branded customer bases.
The terms of the agreement in principle are non-binding and remain subject to documentation, internal approvals and implementation.
Talktalk said it expects to make further announcements, including more detailed terms, in the coming weeks.
The business also confirmed a series of leadership changes which include Dame Tristia Harrison becoming a non-executive director of the group.
James Smith, current group CFO, will become group CEO and will also become CEO of PXC, with Tom O’Hagan stepping up to a new role of executive chairman of PXC.
Susie Buckridge remains CEO of TalkTalk, the group’s consumer business.
Sir Charles Dunstone will continue in his role as group chairman.