Bankers are putting together just under 1 billion euros ($1.28 billion) in financing for a potential sale of Finnish mobile phone company DNA, banking sources familiar with the situation said on Monday.
Swiss bank UBS, financial adviser to DNA, sent out information memorandums to prospective buyers earlier this month on the deal, which could fetch around 1.3 billion euros
The first round of an auction process for DNA's sale is expected in June and Swedish buyout firms EQT and Nordic Capital are likely to submit bids as are at least two other private equity firms including BC Partners and Cinven, bankers said.
EQT, Nordic Capital, BC Partners and Cinven declined to comment. DNA was not immediately available to comment.
If the sale goes through this could provide some evidence of a revival in European M&A activity, which has been depressed this year because of the weak economic climate.
A number of deals have floundered due to buyers and sellers being too far apart on price. A sale of Swedish bedmaker Hilding Anders, for example, might not go ahead after bids were lower than the seller's expectations.
Loans for leveraged buyouts fell by 47 percent to $3.6 billion during the first quarter from the same period last year, Thomson Reuters LPC data shows.
DNA is controlled by companies that were previously local phone carriers in Finland. The largest shareholder is Finda Group, which owns close to 33 percent. The Finnish mobile market is fiercely competitive, with pressure on prices and sales. DNA's larger rival Elisa last month cut its 2013 outlook.
A listing for up to half of DNA shares on the Helsinki stock exchange, allowing owners to sell part of their holdings, is also an option.
UBS has put together a so-called staple debt financing package of just under 1 billion euros for any possible buyers of DNA, bankers said. This is equivalent to around 5 times DNA's 2012 earnings before interest, tax, depreciation and amortisation of 191 million euros.
Staple financing arrangements give would-be buyers confidence that financing is available for a deal.
Senior leveraged loans and high-yield bonds are all being considered for the financial package. Other banks are also working on rival debt packages for the bidders, bankers said.