Epiris Seeks £300m BT Waiver in Final Stage of TalkTalk Rescue Talks

Sky News··GB·Read original
4▲1 ▼0Impact / 5
Summary · why it matters

Private equity firm Epiris has asked BT's Openreach division for a three-month payment holiday worth around £200m-£250m as part of its bid to buy TalkTalk's wholesale arm PXC, with PXC also owing Openreach roughly £100m in outstanding debts following a partial payment made this week, bringing the total value of the requested waiver to about £300m. BT has yet to formally respond to the request, and Sky News reported on Wednesday that rejecting the proposal could pave the way for BT to take control of PXC despite apparent competition hurdles. Epiris, which is also in the midst of a takeover bid for London-listed Gamma Communications, plans to invest a substantial sum into PXC if it buys the business through a pre-pack insolvency process, and is proposing that Openreach share in proceeds from any future sale above an undisclosed threshold. PXC typically pays between £60m and £80m a month to Openreach, making it TalkTalk's biggest supplier, and serves thousands of vulnerable customers as well as hospitals, doctors' surgeries and other critical national infrastructure. Both the sale of PXC to Epiris and the sale of TalkTalk's consumer arm, which has about 1.7 million customers, to Ares Management would be implemented via pre-pack administration overseen by Alvarez & Marsal; if no orderly pre-pack can take place, TalkTalk is likely to collapse by the start of next week, with BT the obvious buyer as the government seeks to avoid hundreds of thousands of customers losing broadband supply. TalkTalk confirmed last Friday that it was in advanced negotiations and expects to conclude both transactions imminently, while Epiris, TalkTalk and BT all declined to comment.

Impact on assets 5

Cloud & Digital Infrastructure▲
BT Group Plc
BT-A
▲ PositiveCapitalrelevance

BT/Openreach could take control of PXC if it rejects Epiris's £300m waiver request, and BT is the obvious buyer if TalkTalk collapses.

Financials▲
Ares Management LP
ARES
± MixedCapitalrelevance

Ares is named as the buyer of TalkTalk's consumer arm via pre-pack administration, but no terms or outcome are given.

Artificial Intelligence▲
Consumer Discretionary▲

Off-coverage companies 4

PXCi
Private± MixedCapitalrelevance

Epiris seeks a ~£300m Openreach payment waiver and plans a pre-pack buy of PXC, with BT potentially taking control if the waiver is rejected.

TalkTalki
Private▼ NegativeCapitalrelevance

TalkTalk faces likely collapse by early next week if no orderly pre-pack for PXC and its consumer arm can be completed.

Epiris LLPi
Private± MixedCapitalrelevance

Epiris is bidding for PXC and seeking a £300m Openreach waiver, but BT has not responded and the outcome is uncertain.

Alvarez & Marsali
Private± Mixedrelevance