Dutch telco KPN has launched its €3bn (US$3.9bn) rights issue, announcing it will sell nearly 2.84 billion new ordinary shares at €1.06 each – equating to a 62% discount on their closing trading price yesterday.
Shares offered as part of the…
Dutch telco KPN has launched its €3bn (US$3.9bn) rights issue, announcing it will sell nearly 2.84 billion new ordinary shares at €1.06 each – equating to a 62% discount on their closing trading price yesterday.
Shares offered as part of the two-for-one rights issue, fully underwritten by a syndicate of banks, have a nominal value of €0.24.
The telco said the €1.06 issue price represents a discount of 35.1% on the theoretical share price post-rights issue, based on the €2.78 closing price of ordinary shares on the NYSE Euronext in Amsterdam yesterday.
Major shareholder America Movil (AMX) has committed to subscribe for the rights pro rata to its current shareholding of 29.77%.
Rights will also be granted to other investors pro rata to their shareholdings, the company said, adding that the statutory pre-emptive rights of existing shareholders have been excluded with respect to this offering.
The exercise period starts tomorrow and ends on 14 May. Any remaining rump shares will be sold in private placements to institutional and professional investors after the end of the exercise period.
Joint global coordinators and bookrunners for the issue are Deutsche Bank, Goldman Sachs and JP Morgan. ABN AMRO, ING and Rabobank are also joint bookrunners. Barclays, BofA Merrill Lynch, Citigroup and UBS are co-bookrunners, while BNP Paribas, Credit Suisse, Societe Generale and UniCredit are co-lead managers. Rothschild is acting as the company’s financial adviser.
KPN CEO Eelco Blok noted that the rights issue marks the final step in the telco’s €4bn capital raise, first announced in February. The raise also included hybrid bond issues worth a total €2bn, completed in late March.
“The proceeds from the capital raise will align our financial position wit our strategy. Moreover, it will provide financial as well as strategic flexibility and will allow KPN to invest in its operations and reduce its net debt level as well as support our commitment to maintain an investment-grade credit profile.”
Bernstein Research analysts said in a note to clients that the two-for-one issue at €1.06 per share implies a cum-rights price of €2.75 and an ex-rights price of €1.90. This represents a higher dilution post-rights than their previously-reported estimate, resulting in a lower post-rights price, they said.
“The higher dilution in terms of number of shares will help to make KPN’s shares optically cheaper and give investors a little more flexibility when deciding to subscribe or not, while also creating more liquidity in trading of the rights options.”
The analysts predict the rights issue will be successfully completed and that the fresh capital will help to preserve that already invested in the business.
KPN reported revenues of €2.91bn for Q1 2013, down 8.8% year-on-year. EBITDA was down 12% y-o-y to €994m.
