‘Black Mirror’ Producer Hits Debt Market for Acquisition Funding

(Bloomberg) -- More than 2 billion euros of bonds and loans backing Banijay’s acquisition of the Dutch production company behind hit shows ranging from “Big Brother” to “Peaky Blinders” launched to the market on Tuesday.

The deal, which will see French content producer Banijay Group buy rival Endemol Shine Group from Walt Disney Co. and Apollo Global Management Inc, will include euros and dollars worth 1.25 billion euros ($1.39 billion) of bonds and around 950 million euros of loans.

Investors are hungry for the yield offered by lower-rated debt, as the European Central Bank’s stimulus package has hammered the returns on investment grade products. Still, would-be buyers will have to grapple with Banijay’s rising leverage on the back of the acquisition, and an expected fall in its credit ratings. Some of the bonds offered in the new debt package will rank toward the lowest end of the junk ratings spectrum at CCC+.

Pro forma for the acquisition, Banijay’s adjusted leverage in 2020-2022 will exceed 5x, S&P Global Ratings said in a note on Tuesday. The ratings firm then expects to lower Banijay’s rating by one notch to B once the transaction closes.

Endemol, the world’s largest independent TV content producer, currently owns more than 120 production companies in 23 countries and reported almost 1.8 billion euros in revenues and 159 million euros of Ebitda in 2018, the latest figures available show. The group derived about 71% of its revenues from the production of non-scripted shows, including “MasterChef” and “Wife Swap”, and 25% from scripted shows including “Black Mirror” and “Peaky Blinders”. Combined revenues will total 3 billion euros following the acquisition.

Checkered Past

Investors will also have to take into account Endemol’s troubled history. The company underwent a debt-for-equity restructuring in 2012 leading Apollo and investment firm Cyrte to take control of the business. In 2007, Italian broadcast Mediaset Spa, its Spanish unit Mediaset Espana Comunicacion SA and partners Cyrte Fund II BV and Goldman Sachs Group Inc. took over Endemol.

Goldman Sachs and four other banks sold 1.1 billion euros of high-yield debt backing the 2007 buyout at a loss as the markets froze amid the global financial crisis.

The debt for Banijay’s acquisition is the second jumbo deal to launch in Europe this week after United Group BV announced a 1.8 billion-euro deal Monday, the largest high-yield bond transaction in Europe since May.

Investor meetings for the bonds and loans will take place Wednesday through Friday across London and Paris, before moving to the U.S next week.

--With assistance from Ruth McGavin.

To contact the reporter on this story: Laura Benitez in London at lbenitez1@bloomberg.net

To contact the editors responsible for this story: Vivianne Rodrigues at vrodrigues3@bloomberg.net, Ruth McGavin, Bruce Douglas

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