CMS Cameron McKenna has advised the China CEE Investment Co-operation Fund, advised by CEE Equity Partners, on its acquisition of 99.9% of Magyar Telecom B.V.'s holdings in the Invitel Group. Dechert involved Magyar Telecom ("Matel") on the deal, which was approved unanimously by Matel's Board of Directors, but remains subject to shareholder and Hungarian competition authority approval. White & Case, Clifford Chance, Dentons, and Lakatos Koves & Partners advised on the new security package.
The sale values the Invitel Group at an enterprise value of EUR 202 million, or 4.5x 2015 EBITDA. Approval of the company’s 49% shareholder, Matel Holdings Limited, is being solicited via a consent request, distributed via the customary channels. Matel Holdings Limited shares are stapled to Matel's senior secured notes due June 2018 as units. The notes will be redeemed upon completion of the sale. Matel’s 51% shareholder, Mid Europa Partners, has expressed its support of the sale.
Competition Authority filings are being submitted parallel to the shareholder consent process. Should shareholder consent be obtained, the sale is estimated to complete in the second half of February, upon Competition Authority approval. Upon completion of the sale, Matel will redeem the notes, distribute the net transaction proceeds to shareholders, and wind itself up. Distributions to holders of the units will be made as soon as practical after completion.
Magyar Telecom B.V. is the holding company for the Invitel Group, a leading Hungarian infrastructure-based telco and IT service provider. Matel's holdings in the group are the subject of the sale: Invitel Zrt., Invitech Solutions Zrt., Invitel Central Services Zrt. (each 99.991487%), and Invitel Technocom Kft. (100%).
Invitel Zrt. offers a portfolio of services for residential and small business customers, including a variety of multimedia and entertainment services such as interactive, 3 digital and High Definition television, and fast Internet offerings and telephony services across its regional networks. Invitech Solutions Zrt. is an IT, datacenter, and telco provider to 6,000 midsize, enterprise, government, and wholesale customers nationwide. Invitech Solutions Zrt. has network in all top 100 cities in Hungary, has a 9000-kilometer national backbone network with 11 border-crossing points and operates six high-spec data centers.
Commenting on the transaction, Mark Nelson-Smith, Chairman of Matel, said "The Invitel Group has achieved an impressive operational turnaround over the past several years, returning to EBITDA growth starting in 2015 after a decade of decline. The China CEE Fund and CEE Equity Partners will provide the Company with the support and stability to develop its business further. We wish management and the entire Invitel team continued success.” Tamas Szalai, CEE Equity Partners Investment Director, said that “the Invitel Group’s focus on residential fiber developments and converged B2B IT-telco solutions is a winning strategy. We are fully committed to support the Invitel Group’s strategic development efforts."
The CMS team was led by Partner Aniko Kircsi and included Partner Dora Petranyi, Senior Counsel Corporate Gabor Gelencser, and Senior Associate Szabolcs Szendro.
The Lakatos Koves & Partners team consisted of Partners Szabolcs Mestyan and John Fenemore and Trainee Lawyers Balazs Rokob and Kristof Nemeth.