Tele Columbus Lender Co-op Reaches 75%; Bonds Trade Down as Price Gap Between SteerCo and Non-SteerCo Paper Widens

About 75% of Tele Columbus’ secured creditors have joined a co-op agreement launched last week, before the deadline to enter the group closes, sources told Octus.

The co-op is spearheaded by a steering committee, or SteerCo, of Tele Columbus’ largest holders, led by Arini and Sona, and including PSquared, Helikon and BlackRock, sources added. The SteerCo accounts for well over half of both the German fiber provider’s senior secured bonds and loans.

Ares is also among the creditors, but has not joined the co-op for the time being, sources said.

The co-op agreement, signed last week, gave lenders 10 days to join, before entry closes on May 19, sources noted. The co-op agreement will last for one year, they added.

Milbank and Houlihan Lokey are advising co-op lenders, as reported.

The company’s €650 million senior secured notes and €503 million term loan, both due in 2029, have slid a few points since the launch of the co-op, and are both bid at 57.4, according to IHS Markit. Sources noted that the move was largely due to a split in pricing between SteerCo and non-SteerCo paper, with the former trading about 8 to 10 points higher.

The launch of the co-op agreement has raised concerns that the SteerCo creditor group could use it to engineer a non-pro rata deal against lenders who don’t sign up to the co-op, some sources said.

Other sources argued that the co-op agreement is aimed at creating a stronger creditor front in upcoming talks with Tele Columbus’ sponsor, Morgan Stanley Infrastructure Partners, or MSIP. Given the current size of the co-op, they also questioned the purpose of engineering a non-pro rata deal when the value to be extracted from the non-co-op lenders under such a deal would be comparatively small.

As explored in Octus’ recovery analysis earlier this year, a non-pro-rata deal is theoretically possible as the requirement under the bond documentation for pro rata treatment of bondholders and term lenders upon voluntary repurchases of the debt for cash or any other consideration is not a “sacred” right and can be amended with majority bondholders’ consent. If majority bondholders are part of the co-op, then they could vote to amend that provision of the indenture.

See further down for non-pro-rata risks highlighted in Octus’ recovery analysis. Octus has not reviewed terms of the group’s existing term loans and as a result, there may be further restrictions under such agreement.

MSIP Support Under Question

The co-op comes amid a growing new money need for the company, and questions over whether MSIP will be willing to put in the funding needed to reach the company’s fiber-to-the-home, or FTTH, rollout goals.

Under a previous amend and extend, or A&E, completed in 2024, MSIP had provided Tele Columbus with a €300 million shareholder loan that has since been equitized.

It remains to be seen whether the sponsor will be supportive again, after the company burned through the shareholder loan within five quarters, despite only managing to increase the percentage share of its own network that is FTTH to 7.9% from 5.7%.

Due to a time lag as a result of work in progress, the most recent third-quarter 2025 reporting period shows the FTTH share stands at just 8.9%.

The company’s original business plan, which was part of the 2024 A&E, had forecast for 42% of the network to be FTTH by the end of 2028.

With the group’s current FTTH share, the business is not profitable enough to generate cash, given LTM cash burn at the third quarter of 2025 was €101.3 million, despite paying zero cash interest on its €1.312 billion of senior secured debt, according to Octus’ earlier analysis.

As of the third quarter of 2025, the group reported €67.5 million of cash, implying just €32.5 million of headroom above the €35 million minimum liquidity covenant under the amended term loan. Octus forecasts that, even assuming all expansionary FTTH capex is halted, the group would breach this covenant in the fourth quarter of this year. If current capex levels, which have already been drastically reduced, are maintained, the breach would instead occur in the second quarter of 2026.

In Octus’ base case, the company requires €309 million to bring the FTTH revenue-generating unit, or RGU, mix to 40%, meaning that it needs to agree on a new deal with lenders and MSIP to bridge the gap to cash generation.

To complete the group’s entire pipeline of contracted FTTH rollout of 2.2 million homes would cost €1.444 billion, bringing FTTH share to 89.1%.

It is not clear whether MSIP would be willing to put in €350 million of new money – comprising the €309 million funding gap to reach 40% FTTH RGU mix, plus a liquidity cushion.

If MSIP is not supportive, lenders could consider enforcing their pledges in the event of a liquidity covenant breach, paving the way for a takeover of the group, some sources said.
However, other sources argued that given Tele Columbus represents about 20% of the MSIP fund’s investment, the sponsor may be incentivized to provide the support needed and not give up ownership.

Non-Pro-Rata Potential

While the co-op would help strengthen creditors’ negotiating power in talks with MSIP, a scenario where the sponsor is not supportive creates greater risks of non-pro-rata treatment for creditors outside of the co-op, as investors would need a large incentive to provide the estimated €350 million of new funding, increasing the appeal of a recovery-maximizing transaction to lenders who provide the new money.

As noted in Octus’ covenant analysis on the bonds, a simple majority is required to amend super senior capacity from the current €100 million level. Additionally, the provision requiring lenders to be offered a pro rata opportunity to participate in providing such super senior new money is not a “super majority” matter and can be amended with consent of majority bondholders. Lastly, provisions requiring pro rata treatment of bondholders if the issuer redeems or repurchases the bonds (and the related conditions) can also be amended or waived with majority bondholders’ consent.

An ad hoc group, or AHG, representing over 51% of the value across both bonds and loans could effectively increase super senior capacity to over €1 billion. The AHG could then agree to provide the required €350 million funding required at the super senior level. In return it would have its debt exchanged into super senior money (€668.9 million, based on 51% multiplied by the €1.312 billion currently outstanding). However, minority bondholders could make an argument that incurrence of such quantum of super senior debt and related changes to effect the uptiering transaction affect the ranking and priority of the bonds and therefore is a 90% super majority consent matter.

When calculating recoveries under this scenario, Octus assumed that terminal EBITDA multiple rises from 8.7x in the no-FTTH investment case, to 10.7x in the investment case, as a result of the value crystallized by a more well invested network.

Under this highly aggressive liability management exercise scenario, the AHG participating would see recoveries rising from 58.5% in the base case to 100%, though barely covered at a 99% loan to value through to the senior secured debt.

Octus noted that although this scenario is possible, this would likely be aggressively litigated.

MSIP, Arini, Sona, BlackRock, Ares and PSquared declined to comment. Tele Columbus, Houlihan Lokey, Milbank and Helikon did not respond to requests for comment.