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Reports suggest that Macquarie will walk away from the £450 million deal to buy a stake in TalkTalk’s wholesale division, PlatformX Communications (PXC)
According to reports over the weekend, discussions between TalkTalk and Macquarie regarding a stake sale in PXC have reached an impasse.
Macquarie was reportedly looking to spend up to £450 million on buying a 40% stake in the business, valuing PXC at £1.2 billion.
Reasons for the breakdown of negotiations were not revealed, though reports suggest Macquarie could reopen negotiations if TalkTalk’s financial situation improves.
TalkTalk had been struggling under the weight of immense debt for several years now, with the current total standing at over £1 billion. With the company failing to significantly improve its balance sheet by traditional means, TalkTalk announced it would carve up the business into three separate units – its B2B Wholesale Platform (now rebranded as PXC), TalkTalk Consumer, and TalkTalk Business Direct – in September last year.
Since then, the various business unit have been the focus of much investor attention. Just one month after the announcement, TalkTalk confirmed the sale of its business unit to a group of its own shareholders for £95 million under a special purpose vehicle called TFP Telecoms.
Some months later, in February, Virgin Media O2 was tipped to be in discussions for TalkTalk’s consumer division, though a deal has yet to materialise.
This left the prospective sale of PXC to Macquarie as a major financial lifeline for TalkTalk, with the company desperately need a cash injection ahead of looming debt deadlines. The company is due to repay £685 million in bonds in February, while a revolving credit facility of £330 million is set to be refinanced in November.
The company’s founder, Sir Chales Dunstone, and other major shareholders are currently in discussions with TalkTalk over a potential investment of over £180 million to help keep the company solvent.
“Funding proposals to refinance the group’s balance sheet are under active discussion,” said James Smith, TalkTalk’s chief financial officer. “We are making constructive progress and are confident of a near term agreement which will ensure the group is well capitalised going forward.”
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