Millicom has placed a SEK2bn (US$246m) three-year bond in the Swedish market as it accepts SEK1.57bn (US$193m) worth of bonds in its early tender offer. Fitch said last week that its proposed BB+ rating for the new bond reflects “the company’s geographical diversification, strong brand recognition and network quality, all of which have contributed to its leading market positions in key markets, steady subscriber growth, and solid operational cash flow generation”.
Millicom (STO:MIC) has placed a SEK2bn (US$246m) three-year bond in the Swedish market as it accepts SEK1.57bn (US$193m) worth of bonds in its early tender offer.
The Luxembourg-based telco, which focuses on emerging markets in Africa and Latin America, said in a statement that the new bond was issued at par and will have a floating rate coupon of 3.3% over the three month Stockholm Interbank Offered Rate (Stibor).
The joint bookrunners on the bond issuance are DNB and Nordea Bank.
Fitch said last week that it expected to rate the then-proposed issue BB+.
“Millicom’s ratings reflect the company’s geographical diversification, strong brand recognition and network quality, all of which have contributed to its leading market positions in key markets, steady subscriber growth, and solid operational cash flow generation,” the rating agency said. “In addition, the rapid uptake in subscribers’ data usage, as well as Millicom’s ongoing expansion into the under-penetrated fixed-line services bode well for its medium to long-term revenue growth.”
However, Fitch said the company’s ratings are constrained by its presence in African and Latin American countries with low sovereign ratings together with the recent increase in its financial leverage due to M&A, high shareholder returns and debt allocation between subsidiaries and the holding company.
The proceeds of the new issuance will be used to finance Millicom’s purchase of notes tendered in its early tender offer and, if completed, the regular tender offer. Both offers are detailed in a memorandum dated 12 April.
The early tender offer saw Millicom offer holders of its SEK250m (US$31m) of 5.125% senior unsecured fixed rate notes due 2017 and SEK1.75bn (US$216m) of Stibor plus 3.5% senior unsecured floating rate notes due the same year to tender them for purchase by 15 April.
At the time of the deadline, SEK169m (US$21m) of the fixed rate notes and SEK1.4bn (US$172m) of the floating rate notes had been validly tendered, the telco said, adding that it had decided to accept all for purchase. It will pay holders of the fixed rate notes 105.8% of the nominal amount plus interest and floating rate noteholders 102.8%.
The early tender offer is expected to settle on 21 April, after which SEK81m (US$10m) of the fixed rate notes and SEK348m (US$43m) of the floating will remain outstanding.
Millicom is now offering to pay cash for each SEK1m (US$123,202) worth of notes validly tendered by 4pm CET on 27 April in the regular tender. Those with fixed rate notes would still receive 105.8% of the nominal amount with interest, while those with floating rate notes would still get 102.8%. The anticipated settlement date for the regular tender is 2 May.
Nordea Bank is the tender agent for both the early and regular tender offers, while DNB is acting as a dealer manager in connection with the offers.
In February, Millicom agreed to sell its operations in the Democratic Republic of Congo (DRC) to French incumbent Orange for US$160m in cash.
Millicom CEO Mauricio Ramos said at the time: “The sale of Tigo DRC is in line with our strategy of supporting consolidation and concentrating our resources in our most promising markets. Proceeds from the sale will strengthen our balance sheet allowing us to reinvest in our existing Latin American and African markets, improving earnings and cash flow and reducing leverage.”
Later in February, Millicom agreed to buy TV Cable Paraná, the leading cable TV provider in Paraguay’s largest city Ciudad del Este, for an undisclosed price.
