The Telecoms firm, Energis, is believed to be holding early stage talks with bankers over the refinancing of its debt in a move that would give it extra headroom to make acquisitions.
While the company is said to be fully funded on its current business plan, market sources said the firm was looking at refinancing its short-term debt. Its shares closed up 7.25p at 69.25p.
Energis has an estimated £545m of bonds, about £600m of syndicated bank financing and about £200m of bridge financing. The company, which was said to be fully funded before that extra bridge financing was set up, is understood to be considering refinancing that £200m loan.
Others, however, believe Energis planned to increase its existing core loan by £250m to about £850m and would wrap the £200m bridge loan into the new facility.
One banking source stressed, however, that the talks were at a very early stage and that an announcement was not likely to appear until the end of next month.
Moreover, that source said Energis had no specific acquisition targets in mind and thought it unlikely it would buy assets either in Atlantic Telecom, which recently went into administration, or in Redstone Telecom, which had to carry out an eleventh hour rescue fundraising over the summer.
"The notion of refinancing makes sense at some point purely to increase their headroom," the source said. "It's quite possible they would consider buying assets in Europe but there's nothing on the horizon right now."
All telecoms operators have come under severe scrutiny of late as investors fretted they would run out of cash before turning in a profit.
Analysts expect Energis, which refused to comment on the refinancing speculation, to break even during 2004.
The company reported last month that it was in the process of bidding for over £400m worth of contracts. It also said that it expected sales in the six months to 30 September to be "marginally below" £500m, while Ebitda – earnings before interest, tax, depreciation and amortisation – would be close to the second half of last year's £75m.
Atlantic was forced into administration by its bondholders who believed the company would not survive and who wanted to try and recoup some of their investment before the firm's cash resources ran out.Reuse content