PARIS/MILAN: Blackstone Group LP, KKR & Co. and three leveraged buyout firms that bought Denmark's TDC A/S in Europe's biggest LBO at the time are preparing to sell part of their stake, five people familiar with the plans said.

The firms will interview banks before the end of this month to arrange the stock sale next year, said the people, who declined to be identified because the talks are confidential. The companies may sell part of their 88% stake in TDC, valued at about $7.4 billion, while the Copenhagen-based phone company may also offer new stock to raise cash, the people said.

KKR, Blackstone, Apax Partners LLP, Permira Advisers LLP and Providence Equity Partners Inc. acquired Denmark's biggest phone company in 2006 with about $3 billion of cash from their funds and about $12 billion of debt. TDC has since reduced its debt by half, cut jobs and sold assets, including its stake in Polish mobile phone services provider Polkomtel SA and its Hungarian phone and cable unit. The firms are preparing the sale after the MSCI World Index of equities in 23 developed markets posted an eight-month, 68% surge.

"Operationally the company is doing very well," said Alex Hauge Andersen, a credit analyst at Jyske Bank A/S in Silkeborg, Denmark. "The owners have done what they set out to do: they've divested in non-core businesses and brought down debt in line with other European phone companies," such as Bonn-based Deutsche Telekom AG, he said.

About 12% of TDC's shares still trade on the Copenhagen Stock Exchange after Danish pension fund ATP, owner of more than 5%, rejected the firms' takeover offer. TDC rose 0.7% to 209.5 Danish kroner in Copenhagen yesterday, valuing the company at about 41.6 billion kroner ($8.4 billion).

JPMorgan, Deutsche Bank

Officials at New York-based KKR and Blackstone as well as London-based Permira declined to comment. Spokesmen for London- based Apax and Providence, based in the Rhode Island city of the same name, couldn't be immediately reached. A TDC official declined to comment on "rumors and speculation."

The firms were advised by New York-based JPMorgan Chase & Co., SEB AB in Stockholm and Frankfurt-based Deutsche Bank AG on their takeover in 2006. TDC was advised by New York-based Goldman Sachs Group Inc.

TDC may consider merging its Swiss unit Sunrise with other rivals, said Jyske's Andersen. Assuming the business is sold, TDC will be left with net debt of 2.1 times earnings before interest, taxes, depreciation and amortization, according to Andersen. That would be less than Deutsche Telekom, whose net debt amounts to about 2.4 times Ebitda, he said.

TDC earnings

TDC said on Nov. 6 that third-quarter net income rose 70% to 924 million kroner from the year-earlier period. Debt totalled $5.76 billion at the end of the third quarter, down 30% from a year ago, according to company filings.

The offering would come after bankers were forced to pull three US IPOs, two of which were controlled by private-equity firms, since Oct. 29 amid the worst returns for American offerings in at least 14 years, according to Bloomberg data.

The TDC buyout was Europe's biggest until KKR's purchase of Nottingham, England-based Alliance Boots Plc, the UK's largest drugstore chain, for 11.1 billion pounds ($18.5 billion) in June 2007. Dollar General Corp., the Goodlettsville, Tennessee-based discount retailer that KKR took private in July 2007, plans to sell shares in an IPO this week.