17 January 2023

Glasfaser Nordwest FTTH expansion reaches financial close

Telecoms and Communications

The non-recourse financing of the expansion of Glasfaser Nordwest's FTTH network in northwest Germany has reached financial close and the first disbursement of funds has taken place. Glasfaser Nordwest is a 50/50 joint venture between Deutsche Telekom and EWE. Sources close to the deal indicate that roughly €800 million of debt has been raised to finance the fibre roll-out, with the debt comprising a senior capex facility, a revolver, and an uncommitted accordion. Lenders on the transaction include BNP Paribas, ING, KfW-IPEX Bank, ABN Amro, Helaba, MUFG, and NatWest. The financing is a club deal, although the terms of the financing were initially agreed with ING and BNP Paribas and the rest of the banks joined before financial close, meaning that there was no formal underwriting process or syndication.

The transaction is structured as a hard mini-perm with a maturity of five to seven years. Draw downs will be staggered and are partly contingent on Glasfaser Nordwest securing sufficient customers to continue the expansion. Allen & Overy is legal adviser to the sponsors and White & Case is counsel to the lenders. Glasfaser Nordwest is currently subject to ongoing antitrust proceedings as a result of a legal challenge brought by Vodafone to the approval of the joint venture by Germany's Federal Cartel Office, although the litigation is not expected to have a serious impact on the project. It is anticipated that, at most, a court ruling will refer a decision about the joint venture approval back to the Federal Cartel Office. Sources indicate that it is improbable that the Federal Cartel Office would reverse its approval of the joint venture and that the authority would likely re-issue the approval with a few additional conditions. Glasfaser Nordwest aims to roll out fibre to 1.5 million customers by 2030.  

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