Senior Credit Analyst, Lucror Analytics

Leonard Law, CFA

Senior Credit Analyst

High Yield Experts

Lucror Analytics

Lucror Analytics is a leading credit and ESG research specialist and a provider of technology solutions for differentiated fixed income strategies. Our roots are in bottom-up fundamental credit analysis with a specialization in high yield corporate credits from Europe, Asia and Latin America. We are one of few research specialists integrating ESG considerations with fundamental credit research through a dedicated ESG platform. Our ESG assessment covers five key criteria: Disclosure, E,S, & G Pillars, Controversies, ESG Impact on Credit and ESG Momentum.

Recognizing the importance and value-add of Factor Investing in fixed income, Lucror developed the Smart Quant Navigator (SQN), an intuitive platform that helps clients devise and implement factor-based strategies ranging from pure quant to active fundamental, with integrated ESG.

Our company has been at the forefront of developments in the fixed income markets, identifying opportunities and consistently delivering new products and value-adding solutions to clients. Lucror has close relationships with the largest and most reputable asset managers, family offices, hedge funds, investment and wealth managers globally.

<ul>
<li>Lucror Analytics' ESG Scores are based on a 3-tiered scale and are adjusted for Controversies (if applicable).</li>
<li>We assess Tele Columbus' ESG as "Adequate", in line with its Social and Governance scores. The company has a "Strong" score for the Environmental pillar. Controversies are "Immaterial" and Disclosure is "Adequate".</li>
<li>Tele Columbus (TC) is Germany’s third-largest cable operator, offering cable TV, broadband Internet and fixed-line telephony services.</li>
</ul>


Lucror Analytics' ESG Scores are based on a 3-tiered scale and are adjusted for Controversies (if applicable).
We assess Tele Columbus' ESG as "Adequate", in line with its Social and Governance scores. The company has a "Strong" score for the Environmental pillar. Controversies are "Immaterial" and Disclosure is "Adequate".
Tele Columbus (TC) is Germany’s third-largest cable operator, offering cable TV, broadband Internet and fixed-line telephony services.


Tele Columbus - ESG Report - Lucror Analytics

European Event-Driven Analyst

Jesus Rodriguez Aguilar

Event-Driven

On 21 December, Morgan Stanley Infrastructure Inc. offered to acquire <a href="https://www.smartkarma.com/entities/tele-columbus-ag" target="_blank" data-smartkarma-citation="entities:21727:1" rel="noopener">Tele Columbus Ag (TC1 GR)</a> from <a href="https://www.smartkarma.com/entities/united-internet-ag" target="_blank" data-smartkarma-citation="entities:21735:1" rel="noopener">United Internet Ag (UTDI GR)</a> United Internet Investments Holding AG &amp; Co. KG, <a href="https://www.smartkarma.com/entities/rocket-internet-se" target="_blank" data-smartkarma-citation="entities:20226:1" rel="noopener">Rocket Internet Se (RKET GR)</a>, Union Investment Privatfonds GmbH, 3d investors, and others for approximately €380 mn.
<div>
The deal will also strengthen the balance sheet of Tele Columbus.
<ul>
<li>Morgan Stanley is also backing a €475 million rights issue, and will make available a further €75 million in equity after completion to back the firm's fiber strategy.</li>
<li>Tele Columbus said the deal would significantly reduce its net debt, and thereby bring a “better risk assessment” for the remaining bonds and loans.</li>
<li>If the takeover offer is successful, United Internet will contribute its stake in Tele Columbus of around 29.9%. In return, United Internet will receive a minority shareholding in Kublai GmbH.</li>
</ul>
The offered consideration is €3.25 per share in cash.
<ul>
<li>For an implied equity value of €380.58 mn, and an implied EV of 1,925.28 mn (€1,544 mn net debt assumed).</li>
<li>The offer represents 4.1x EV/Fwd Revenue vs. 3.9x for the median of comparable companies and 8.5x EV/Fwd EBITDA vs. 7x for the median of comparable companies.</li>
<li>On this basis, the offer price seems fair. There's business plan execution risk, further down the road.</li>
</ul>
With commitments equivalent to 43.26% from the main shareholders, the offer looks almost certain to succeed.
<ul>
<li>Tele Columbus closed on 22 December at €3.22, a gross spread of 1%, equivalent to 2%-3% annual, depending on the closing.</li>
<li>Although not terribly exciting, it looks a fairly safe trade. Some patience may be needed to build a position.</li>
</ul>
Recommendation is LONG Tele Columbus.
</div>

On 21 December, Morgan Stanley Infrastructure Inc. offered to acquire Tele Columbus Ag (TC1 GR) from United Internet Ag (UTDI GR) United Internet Investments Holding AG &amp; Co. KG, Rocket Internet Se (RKET GR), Union Investment Privatfonds GmbH, 3d investors, and others for approximately €380 mn.

The deal will also strengthen the balance sheet of Tele Columbus.

Morgan Stanley is also backing a €475 million rights issue, and will make available a further €75 million in equity after completion to back the firm's fiber strategy.
Tele Columbus said the deal would significantly reduce its net debt, and thereby bring a “better risk assessment” for the remaining bonds and loans.
If the takeover offer is successful, United Internet will contribute its stake in Tele Columbus of around 29.9%. In return, United Internet will receive a minority shareholding in Kublai GmbH.

The offered consideration is €3.25 per share in cash.

For an implied equity value of €380.58 mn, and an implied EV of 1,925.28 mn (€1,544 mn net debt assumed).
The offer represents 4.1x EV/Fwd Revenue vs. 3.9x for the median of comparable companies and 8.5x EV/Fwd EBITDA vs. 7x for the median of comparable companies.
On this basis, the offer price seems fair. There's business plan execution risk, further down the road.

With commitments equivalent to 43.26% from the main shareholders, the offer looks almost certain to succeed.

Tele Columbus closed on 22 December at €3.22, a gross spread of 1%, equivalent to 2%-3% annual, depending on the closing.
Although not terribly exciting, it looks a fairly safe trade. Some patience may be needed to build a position.

Recommendation is LONG Tele Columbus.


Tele Columbus AG - Morgan Stanley Infrastructure Agreed Bid

Germany

Tele Columbus AG provides cable services. The Company offers cable television programming, telephone, and internet connection services to homeowners and the housing industry. Tele Columbus operates throughout Germany.

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Tele Columbus AG (TC1 GR)

Tele Columbus - ESG Report - Lucror Analytics

Lucror Analytics' ESG Scores are based on a 3-tiered scale and are adjusted for Controversies (if applicable). We assess Tele Columbus' ESG as...

Lucror Analytics

Tele Columbus AG - Morgan Stanley Infrastructure Agreed Bid

With commitments of 43.26%, the offer is almost certain to succeed. TC1 closed at a gross spread of 1% (2%-3% annual depending on the closing). It...

Jesus Rodriguez Aguilar

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