KKR sticks by request of due diligence on TIM – source

MILAN (Reuters) – U.S. funding agency KKR is protecting its request to entry Telecom Italia’s knowledge for a due diligence evaluation earlier than it might formalise its takeover bid, an individual near the matter stated.

The request is contained in a letter that’s anticipated to be despatched to Telecom Italia (TIM) afterward Wednesday, the individual added.

KKR in November submitted a non-binding 10.8 billion euro takeover proposal for TIM after investing 1.8 billion euros final yr for a 37.5% stake within the group’s last-mile fixed-line community.

Telecom Italia left the New York-based fund ready almost 4 months with out a solution. However its board this month agreed to have interaction in talks, and gave its prime executives a mandate to find out the scope and size of KKR’s attainable due diligence evaluation. KKR had requested in November for a 4 week due diligence interval.

TIM has stated that its board additionally advised CEO Pietro Labriola and Chairman Salvatore Rossi to higher perceive the phrases of KKR’s supply, asking specifically what impact it could have on TIM’s already excessive debt.

Debt usually quantities to the majority of the financing of buyout provides corresponding to KKR’s. However TIM’s debt load, which quantities to 22 billion euros, will make it laborious for KKR to load it up with extra debt if it completes the deal – as buyout companies usually do, bankers have stated.

KKR in its letter on Wednesday stated that the monetary construction of the corporate wouldn’t change considerably had been its supply to undergo, in accordance with the supply.

Within the newest signal of the group’s monetary fragility, S&P International on Wednesday lower its debt ranking of TIM to ‘BB’ with a adverse outlook.

The choice follows debt downgrades by Moody’s Buyers Service and Fitch Rankings after TIM unveiled a file 2021 loss and a weak outlook as the brand new CEO Labriola introduced a plan to separate its community belongings from its companies arm.

(Reporting by Elvira Pollina; Writing by Valentina Za; modifying by Edward Tobin)