French vendor Alcatel-Lucent has launched a €1bn (US$1.36bn) convertible bond offering to refinance existing debt.
The two tranches, with initial nominal sums of €600m (US$816m) and €400m (US$544m), mature on 30 January 2019 and 30 January 2020…
French vendor Alcatel-Lucent has launched a €1bn (US$1.36bn) convertible bond offering to refinance existing debt.
The two tranches, with initial nominal sums of €600m (US$816m) and €400m (US$544m), mature on 30 January 2019 and 30 January 2020 respectively.
Both tranches may be increased by 10% to reach about €660m (US$898m) and €440m (US$599m), if the over-allotment options are exercised in full by 5 June.
The bonds, to be issued at par on 10 June, can be exchanged for new or existing shares.
The par value of the 2019 bond will equate to a 35% – 40% premium over Alcatel-Lucent’s reference share price on the Euronext Paris, and the 2020 bond to a 32%-37% premium.
The 2019 bonds will not bear interest, while the 2020 bonds will have an annual rate of 0% – 0.25%. The bonds may be redeemed early under certain conditions.
Final terms are set to be determined on 2 June and application will be made to list the bonds on the Euronext Paris.
Joint global coordinators and bookrunners for the transaction are Credit Agricole, Deutsche Bank, Goldman Sachs and Morgan Stanley. BofA Merrill Lynch, Barclays, Citigroup and Natixis are joint bookrunners.
Proceeds are to repay a US$1.75bn senior secured credit facility entered into by subsidiary Alcatel-Lucent USA in January 2013 and secured by various first priority pledges, which could be released if the amount is repaid in full. The Paris-based parent company hopes the offering will also enable it to extend debt maturity and cut associated costs, particularly interest. If not enough is raised to repay the entire amount, the company may use available cash or raise additional finance on the capital markets. It intends to start repaying the credit facility on 19 August, although might do so beforehand.
Alcatel-Lucent announced a turnaround strategy last June which aims to raise €1bn from asset sales by the end of 2015, slash fixed costs by €1bn and cut debt. Since last November, the company has sold US$2.15bn in bonds, secured a €504m loan and raised US$1.3bn through a stock issue.
A company spokesperson described the new bond offering as an important part of its debt re-profiling programme as it could enable the repayment of the 2013 loan, releasing assets in the process and giving it greater financial flexibility.
The group reported revenues of €2.93bn for Q1 2014, up 0.3% year-on-year, and a net loss of €73m.
