Dutch telco KPN has priced a dual-tranche, subordinated hybrid bond for a total €1.56bn (US$2.05bn) as part of its previously-announced capital increase.
The hybrid issue consists of a €1.1bn (US$1.4bn) tranche with a 6.125% coupon and a £400m…
Dutch telco KPN has priced a dual-tranche, subordinated hybrid bond for a total €1.56bn (US$2.05bn) as part of its previously-announced capital increase.
The hybrid issue consists of a €1.1bn (US$1.4bn) tranche with a 6.125% coupon and a £400m (US$524.4m) tranche with a 6.875% coupon, KPN said in a statement. The euro tranche has perpetual maturity and can first be redeemed in 2018, while the sterling tranche has a 60-year maturity and can be redeemed in 2020.
The Hague-based telco announced an intention to raise €4bn in capital in early February and amended plans later in the month, after signing a ‘relationship agreement’ with Mexico-based shareholder, Carlos Slim’s America Movil (AMX). AMX has agreed to support the capital increase and, in return, gains two board seats on the Dutch telco’s supervisory board.
The planned capital hike now consists of up to €2bn worth of hybrid securities, which KPN expects to receive 50% equity recognition, and a €3bn rights offering.
KPN noted in a statement that yesterday’s €1.56bn issue forms a “substantial” part of the hybrid securities component. However, there may be a further issue.
The bonds are to be listed on the NYSE Euronext Amsterdam. Moody’s has rated them Ba1.
The proceeds of the capital increase are to be used to strengthen the telco’s capital structure, repay drawings under its credit facility and upcoming bond redemptions, and invest in operations.
Deutsche Bank, Goldman Sachs and JP Morgan acted as joint structuring advisers and bookrunners for the new issue. BNP Paribas and RBS were also bookrunners, while Barclays and Societe Generale were co-lead managers.
KPN is the second European telco this year to issue hybrid debt – Telekom Austria placed a €600m hybrid bond with perpetual maturity in late January. Telecom Italia recently postponed plans to issue up to €3bn in hybrid securities over 18-24 months, saying it wanted to wait for market conditions to improve.
At the time of writing, the NYSE Euronext-listed telco’s shares were up 3.26% on yesterday’s closing price to €2.789 each.
KPN reported total revenues of €3.274bn for the fourth quarter, down 3% year-on-year. Revenues for the full year stood at €12.708bn, down 3.5% on the 2011 result. EBITDA for 2012 was down 12% to €4.528bn, with an EBITDA margin of 35.6%.
