Manchester telecoms giant Talktalk’s negotiations with private equity giant Macquarie over a possible £450m deal for its wholesale division have stalled, according to reports over the weekend.
The telecoms provider, which was born out of Carphone Warehouse and is one of the UK’s largest broadband providers, is in a race to refinance a billion pounds of credit, and 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 reportedly interested in taking 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 worth £330m, held by a group of banks and due 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.
The Macquarie deal was seen as the capital injection that would give the firm the means to refinance these loans which come to maturity in a much less borrower-friendly environment than the one in which 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 including 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.
The Sunday Times now reports that those talks are on ice, however, with Talktalk focused on amending its agreement with existing lenders, accompanied by a previously reported £200m injection from Dunstone and Toscafund.
The package, which is expected to include a pledge of £200m worth of assets as collateral, will reportedly be put to banks and bondholders at a crunch summit this 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.”
