Univision’s Buyers Arrange Financing

A consortium of private investors who won last month’s bidding for Los Angeles-based Univision Communications Inc. has lined up $10.25 billion in debt financing, making the acquisition a highly leveraged transaction.

Chairman A. Jerrold Perenchio and Univision’s board last month accepted the $12.3-billion offer from the group, which consists of Madison Dearborn Partners, Providence Equity Partners, Texas Pacific Group, Thomas H. Lee Partners and Los Angeles billionaire Haim Saban.

The group also plans to contribute $3.9 billion in cash, according to a proxy that Univision filed with the Securities and Exchange Commission on Monday.

In addition to the $12.3-billion offer, the group would assume $1.4 billion in debt.

In the filing, the Spanish-language media company disclosed details about the contentious auction last month that culminated with Univision’s board jilting its longtime partner, Grupo Televisa of Mexico. Televisa, which owns 11% of Univision, had sought to win the auction.

Two weeks before Televisa submitted its bid, Univision’s attorneys warned the group that its proposed ownership structure might violate U.S. rules that limit foreign ownership of broadcasters. Televisa did not heed the warnings or change the proposed structure, the filing said. The company then lost three private equity partners that had planned to join Televisa’s bid.

Televisa was also unaware that Univision had been negotiating a revised bid with the rival Saban group. Televisa learned the other group had submitted a new bid when the Univision board met June 26 and accepted the Saban group’s offer of $36.25 a share. The filing said that Univision was not allowed to tell Televisa because it had granted the rival Saban group an exclusive 72-hour negotiating window, which did not end until the start of the board meeting.

At that meeting, directors representing Televisa and the Caracas, Venezuela-based Venevision, which owns 14% of Univision’s shares, voted against the consortium’s offer.

The boardroom dissent requires that at least 60% of Univision’s shareholders vote in favor of the sale.

Televisa could have still come up with another offer. If it had made a superior bid, it would have to pay a $300-million break-up fee to the Saban group.

The filing also said that if the Saban group failed to win approval from U.S. regulators, it would have to pay Univision a $500-million termination fee. And the consortium would have to give Univision $300 million if its financing fell apart, according to the filing.

If the deal fails to close by April 26, the consortium each day would have to increase its $36.25-a-share offer a rate of 8% a year, the filing said.