Ripplewood to buy Japan Telecom for USD2.2 billion

22 Aug 2003

US investment firm Ripplewood Holdings has completed a leveraged buy-out (LBO) deal with the Vodafone Group to acquire the telco’s indirect 66.7% stake in fixed line business Japan Telecom. The stake, directly owned by Vodafone subsidiary Japan Telecom Holdings, is worth USD2.22 billion (JPY262 billion) and Ripplewood says it will borrow just under 80% of the funds from a group of banks to pay for it. Under the agreement, Japan Telecom Holdings will receive JPY228.8 billion (USD1.2 billion) in cash, plus JPY32.5 billion (USD200 million) in redeemable preferred equity. Vodafone said it will use the cash to reduce its consolidated net debt. The LBO is the biggest of its kind in Japan; it is expected to be completed in the last quarter of 2003, with Japan Telecom Holdings retaining the preferred equity until July 2004 at the earliest. The deal will enable Vodafone to focus on its key Japanese mobile unit, J-Phone, and to move away from the country’s wireline sector.

Japan