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Invitel Rt., formerly Vivendi Telecom Hungary, announces the refinancing of indebtedness

09 August 2004

On August 9, 2004, Invitel Rt. ("Invitel") announced that it had successfully completed a refinancing of its €260 million senior bank facility and a vendor note payable to Vivendi Telecom International together with partial repayment of shareholder loans (the "Refinancing").

The amounts were incurred in connection with the acquisition in May 2003 of Invitel (formerly known as Vivendi Telecom Hungary or Matel) from Vivendi Telecom International by the investor consortium of GMT Communications Partners and AIG Emerging Europe Infrastructure Fund.

The Refinancing consisted of a new €165 million Senior Credit Facility and the issuance of €142 million of Senior Notes due 2012. 

Commenting on the Refinancing, Ian McKenzie, the Chairman of the Board of Invitel, said: "As a result of this transaction, Invitel's debt obligations will better match its cash flow generation profile, reducing the amortization burden on our short and medium term cash flows and increasing our financial flexibility. We look forward to continuing to deliver strong operating performance on the back of the robust in-concession business supplemented by growth outside of our historical concession areas."

Tim Green, one of the founding partners of GMT said: "The transaction is significant for Invitel as it broadens the Company's access to sources of capital and enhances our ability to pursue strategic initiatives. The investor consortium will also benefit in the short-term from the partial repayment of the shareholder loans. The successful Refinancing also reflects the market's endorsement of the quality and strength of the management team recruited since May 2003."

Craig Butcher, head of EMP Europe's Budapest team commented: "This ground-breaking transaction, which represents the third-ever Hungarian high yield bond issue and a first high yield bond by a Central European issuer in over 3 years is a testimony to both the Company's improved performance since the time of the acquisition as well as the increasing acceptance by the main stream lenders and investors of Central European credits generally".

In addition to Chairman Ian McKenzie, work on the successful transaction was lead by the new CEO (Martin Lea) and CFO (Robert Bowker) who began working at Invitel in June and May 2004 respectively. Martin brings 25 years of telecommunications sector experience to Invitel and was previously CEO of the ETL-SEMKO division of Intertek Group (a FTSE 250 company), and Managing Director of UK telecom operator Racal Telecom. Robert brings 12 years of experience in the telecommunications and financial sectors and was previously the CFO of the leading Czech mobile operator Eurotel Praha.

Invitel  (previously Vivendi Telecom Hungary)
Founded in 1994, Invitel offers telephony, Internet, and data services to residential and business customers in Hungary. Invitel is the incumbent operator in 9 out of 54 primary service areas, where it has a stable cash generative core telephony business. In the rest of Hungary, which represents a significant growth opportunity following the liberalisation of the telecom market, Invitel is an alternative telecom operator with a national backbone, metropolitan networks and point-to-multi-point access system.

AIG Emerging Europe Infrastructure Fund ("EEIF") with $550 million in commitments is a leading private equity investor in Central and Eastern Europe with presence in London, Budapest and Warsaw. Since its inception in 1999, EEIF has made 11 investments in infrastructure-related companies located in 9 countries of Central Europe. EEIF investment portfolio includes stakes in three mobile telephony operations: Orange (Slovakia), MobiFon (Romania), Oskar (Czech Republic), three cable operators: Aster (Poland), Karneval (Czech Republic) and Telemach (Slovenia).

GMT Communications Partners is Europe's leading private equity specialist in the Communications sector. The partners of GMT have worked together since founding Europe's first Communications fund, Baring Communications Equity Limited, in 1992, and have been influential in developing many successful companies.  These include Casema (Netherlands), De Telefoongids, now called YBR Group (Netherlands), EUSA (Spain), Internet Network Services (U.K.), Media Publications (France), Le Marche du Travail (France), MobiFon (Romania), Quote (Netherlands), Orion Publishing (UK), PEPcom (Germany) and Vivendi Telecom Hungary, now called Invitel (Hungary). GMT closed its latest fund of €365 million at the end of 2000, from which it is still actively investing. www.gmtpartners.com

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