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18/06/2013
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$190 million for a two-year investment


On Friday, May 31st, OVH.com invited all the banks that participated in the first syndicated loan requested by the group. During this closing lunch, the hosting provider wanted to thank its banking partners for their trust and willingness to support its development. This occasion allows us to review the details of this financing campaign with Nicolas Boyer, CFO at OVH.com, who initiated the project.



Why choose a syndicated loan?

Historically, to support our investments, we would go with bilateral debts, which mean we had independent financing agreements with each of our banking partners. There were about ten of them already, and we would meet with them, one by one, to negotiate financing agreements case by case. Seeing the stakes and necessary funds grow with OVH.com’s development today, it was essential to rationalize our banking chart and have homogeneous financial conditions.
The idea behind a syndicated loan is this: we work with 2 or 3 banks, called the “arranging banks”, on a debt framework contract, in which we negotiate all the conditions (guarantees, transfer of funds, credit costs, commitment of each party, etc.) Generally, two or three months are necessary for this negotiation. Once an agreement is made, the company and the arranging banks present this debt to a group of banks.
We therefore sought out about fifteen banks, to which we presented to the group how we wanted to raise the debt, and we gave them 15 days to show interest. In the end, we kept a pool of 10 banks, for $140,000,000, even though the total subscription of the sought-after banks was higher.






What are the advantages for OVH.com?

The idea was to secure our investments for a long period of time, instead of renegotiating every trimester or semester, depending on our needs. We therefore asked the banks to make a commitment with us for two years. This happened through what we call a “finance contract”, unique and identical for each of our partners.
The main advantage of the operation is to insure the independence of the group and keep its 100% familial stock ownership. Since no bank owns a share of the company, we keep our freedom and reactivity intact. Moreover, our partners now know us well after studying our files very meticulously to carry out this operation. We therefore have a solid banking pool that can, in the future, be by our side to support new developments and a new external growth.


What was the toughest part of this negotiation?

In fact, it was to ask our bankers to loan us a massive amount of money, without touching our shares. The result demonstrates that OVH.com is a solid player. Throughout our exchanges, we felt the motivation and energy of the people that presented our file to each of the banks. With the management, we saw a strong willingness to participate within the set parameters; we noticed the efforts made by our interlocutors to fully understand our business model. They also showed energy to push the project to their credit committees.







In what ways is it an unprecedented financing campaign?

We are used to leading ambitious projects, in fact, very ambitious projects, and to expose ourselves to our market and clients, but not so much on the financial market. It was a real challenge.
This operation is not a quantum leap for our investments. For the last two or three years, we invested similar amounts of money. This is a change in the structure and the visibility we now have.


What will be the use of the $190 million?

To finance a $270 million investment, knowing that we are auto financing $80 million. We are therefore going to keep developing our datacenters in North America and Europe and keep investing in the infrastructures and OVH.com's network. We will also be able to add to our Cloud Computing offers and telecom solutions to support our new clients. We work in a fast-growing field, with an investment business model that is very cash burning. We therefore have to be able to sustain this need in capital, to invest and pay our debts, while maintaining our independence.




Zoom en images sur le "Closing Lunch"