TPG will raise $300 million to repay iiNet debt and support initiatives

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news Australian telco giant TPG Telecom announced yesterday it plans to raise $300 million through a placement of shares to “sophisticated and institutional” investors in Australia and certain overseas jurisdictions.

“The net proceeds of the placement will be used to partly repay the acquisition debt in order to support ongoing growth capex initiatives (including the recently announced fibre network build for Vodafone Hutchison Australia) and to minimise the company’s overall cost of funding,” TPG said in a statement.

The firm said it will use the proceeds to partly repay debt accrued at the time of its acquisition of iiNet earlier this year. TPG’s bank debt rose to $1.85 billion following the purchase.

The price of new shares will be determined by a bookbuild process. The sale will not have a material impact on the company’s earnings per share this financial year, it said. Further, following the acquisition of iiNet, TGP’s debt gearing rose to 2.6x. The sale will reduce this to 2.2x, the firm added.

TPG is the second largest ISP in Australia and operates the largest mobile virtual network. The company was formed from the merger between Total Peripherals Group, which was established in 1992 by David and Vicky Teoh, and SP Telemedia in 2008.