US investment fund Ripplewood Holdings is rumoured to be putting the final touches to a loan agreement which will facilitate its purchase of Japan Telecom’s fixed line business from Vodafone for approximately USD2.2 billion. JP Morgan, Citibank, Mizuho, Sumitomo Mitsui and Bank of Tokyo-Mitsubishi have been contracted by Ripplewood to finance the majority of the asking price, with JP Morgan also acting as financial advisor for the deal. It is thought the US fund is having to borrow in the region of USD1.75 billion from its banking partners, with most of the balance coming from private equity groups. The loans will be secured on Japan Telecom’s assets and will use the company’s future cash flow as collateral. Ripplewood is paying just under three times the JPY92.3 billion EBITDA that Japan Telecom reported in the year to 31 March 2003.
Vodafone, which purchased a 15% stake in Japan Telecom in December 2000 before upping its shareholding to 66.7% ten months later, has said it is selling the ‘non-core’ fixed line assets in an effort to focus on its Japanese mobile business, J-Phone, the nation’s third-largest operator. At the end of July 2003 J-Phone claimed 14.5 million subscribers, well behind market leader NTT DoCoMo which had 44.7 million subscribers, but almost on a par with second-placed KDDI Corp (14.88 million).