Impending PIK coupon puts pressure on Wind to refinance

giovedì 15 agosto 2013 13:27

* Wind Telecom's structure could prevent PIK payment next year

* Pressure on Wind to refinance EUR10bn debt pile

* VimpelCom's in-house bank expected to come into play

By Robert Smith

LONDON, Aug 15 (IFR) - Italian telecoms firm Wind's long-awaited jumbo refinancing could occur in less than a year, as market sources believe that the company's structure restricts it from paying the first cash coupon on its payment-in-kind notes in July.

Wind's Russian owner VimpelCom has remained tight lipped on how it intends to tackle the Italian firm's debt - which exceeds EUR10bn including debt at the holding company, Wind Acquisition Holdings Finance (WAHF) - but investors and analysts say that the impending PIK payment could force the company's hand in 2014.

Although some of Wind's debt carries double-digit interest payments, funding costs would be slashed if VimpelCom on-lent funds to its subsidiary. Investors are particularly concerned whether Wind can repay nearly EUR5.5bn of debt due in 2017 without support from its parent.

This comprises EUR2.7bn-equivalent of high interest 11.75% senior notes, over EUR2bn in senior credit facilities, and a further EUR790m-equivalent in PIK notes issued out of WAHF.

Although the maturity date of the debt is four years away, the PIK notes have a cash coupon in 2014 that places Wind under additional pressure.   Continua...