Telefónica Brasil has issued a €600m (US$660.7m) zero-coupon bond due 2021, with proceeds to be used to purchase cash-settled call options and for general corporate purposes.
Telefónica Brasil (NYSE:VIV) has issued a €600m (US$660.7m) zero-coupon bond due 2021, with proceeds to be used to purchase cash-settled call options and for general corporate purposes.
The bonds, guaranteed by the Spanish parent company, were priced at 101.25% of their nominal value and do not accrue interest, Madrid-based Telefónica (BME:TEF) said in a statement. They mature on 9 March 2021.
The bonds include a cash-settled conversion option which holders may exercise from 9 November 2020 to the 33rd trading date before maturity. Upon conversion, holders will receive a cash payment partly based on Telefónica’s trading price. The trading price will be determined by applying a 20% premium to the volume-weighted average price of the Spanish company’s shares on the Spanish Securities Markets over 10 consecutive trading days from 3 March 2016. The telco expects to announce this price around 16 March.
Telefónica has concurrently purchased cash-settled call options on its own shares from “certain financial institutions” in order to hedge it and the Brazilian unit’s exposure to any payments to be made under the cash settlement option. The relevant financial institutions have said they expect to enter into transactions in Telefónica shares to hedge their exposure under such call options.
BNP Paribas, Citigroup and Goldman Sachs were the bookrunners for the bond issue.
