Fears that France Telecom's (FT) sale of its Swiss subsidiary will not attract sufficient interest has led the company to prepare pre-arranged financing packages for potential buyers, according to a Reuters report.
FT has been persuaded to adopt this tactic as the crisis in the European financial community makes it more difficult for companies interested in registering an offer for FT Switzerland to borrow sufficient funds. Unnamed sources close to the deal, according to a Reuters report, claim that FT has lined up Credit Suisse and others to put together packaged financing. This type of incentive, know as staple financing, has been used in the past where the owner is keen to accelerate the sale and ease any financial problems.
According to a separate Dow Jones Newswires report, which also cited unnamed sources, FT received up to 10 first-round round bids for Orange Switzerland. Private equity firms including Apax Partners, Bain Capital, Carlyle Group, EQT, Providence Equity Partners and Advent International Corp. were expected to bid alongside telecoms players, including Egyptian tycoon Naguib Sawiris and John Malone's Liberty Global.
However, while any initial bids for FT Switzerland will be non-binding and allow potential buyers access to the company's internal accounts, there are some that believe the asking price of between €1.5 billion to €2 billion is optimistic given the LTE spectrum auctions Switzerland intends to hold in early 2012.
While the likely spectrum prices remain uncertain, some analysts believe that the auction could raise SFr150 million-SFr300 million (€122 million-€243 million) for the Swiss government, making it more difficult for private equity funds to convince banks to finance the deal.
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