The XpFibre refinancing has just been named « Deal of the Year » by several leading publications in the infrastructure sector*. With its innovative structure and significant scale, this deal not only underscores the complexities and agility involved in the refinancing process but also reflects the growing demand for robust digital connectivity across the continent.
Antoine Pinçon, Infrastructure & Energy expert at Natixis CIB, takes a closer look at this landmark transaction, exploring its key features and main takeaways for future fibre network financings.
The XpFibre refinancing exemplifies significant complexity due to its scale and structure, which is based on an investment grade rating, includes an inaugural USPP and the implementation of a fiducie.
Antoine Pinçon
Can you tell us about the XpFibre refinancing and what makes it emblematic?
As one of the largest European digital infrastructure financing transactions to date, the XpFibre refinancing exemplifies significant complexity due to its scale and structure.
XpFibre designs, owns and operates Fibre to the Home (FttH) infrastructure networks through a wholesale, open-access model with a de-facto exclusive footprint of 7.2m homes. 60% of this footprint is owned outright, with the remainder operated through long-term concessions. XpFibre has a large geographical footprint in France focused on medium and low-density areas. Rolled-out lines are split between mass market (B2C) and enterprise lines (B2B), allowing commercial telecom operators to offer broadband services to the end client.
In May 2024, the operator closed a €5,8 billion debt refinancing, which includes a €2.85bn term loan A, a €875m capex facility, a €350m debt service reserve facility, and a €200m working capital facility. Alongside is a two-year €1.5bn bridge-to-private placement, which was refinanced with an almost €1.2bn US and Europe private placement that closed in November (with maturities across 2034, 2037 and 2040).
The refinancing was set up as a platform financing reflecting the mature, brownfield nature of the company, which is supported by long-term contracts and a protective regulatory regime. This multi-sourced financing combines bank, institutional and private placement liquidity as well as fixed and floating rate loans across various tenors. It sets a new benchmark for financing in the fibre sector.
How does it demonstrate complexity, innovation and market impact?
The deal required careful coordination among multiple financial institutions. The key innovative features of the transaction include:
- A bridge-to-private placement and the closing of an inaugural €1.2 billion US and European Private Placement (USPP); XpFibre has thus been the first operator to establish a USPP loan in the European fiber sector, which has allowed for a broader pool of liquidity and better financial terms for the client. This was key to make the deal possible, given its size.
- A structure based on an investment grade rating by both S&P and DBRS following the issuance of the private placement notes. It is also this categorization that contributed to unlocking the availability of new pools of liquidity. It is the first deal in the fibre sector in France to be based on a private rating. This demonstrates that the sector is gaining maturity.
- The implementation of a fiducie (French trust equivalent) over the shares of the borrower, improving the position of the secured creditors towards the French bankruptcy law. Natixis CIB acted as the Fiduciary Agent (“Fiduciaire”).
What other significant role did Natixis CIB play in the transaction?
Natixis CIB served as one of the six Mandated Lead Arranger Underwriter, Bookrunner, Placement Agent and Hedging Bank for the refinancing of XpFibre. Our role included participating in the development of the financial structure, coordinating with multiple stakeholders, and ensuring that the transaction met the strategic objectives of the sponsors - Altice, Omers, Allianz and Axa.
Our experience with the initial financing in 2019 and subsequent incremental transactions positioned us as a key party throughout the refinancing process. The structure put in place paves the way for the future financing needs of XpFibre. In particular, the establishment of a rated private placement which provides strong diversification in funding sources. XpFibre has thus opened the way to replicate this structure for maturing fibre business in France and Europe.
Thank you Antoine.
* Europe Telecoms Deal of the Year by PFI, Digital Infrastructure Deal of the Year - Europe by IJGlobal
