Dutch telco KPN has priced a US$600m, 60-year hybrid bond, completing the €2bn (US$2.5bn) hybrid securities component of its previously-announced capital raise.
The US dollar-denominated, subordinated bond carries a coupon of 7% and can first be…
Dutch telco KPN has priced a US$600m, 60-year hybrid bond, completing the €2bn (US$2.5bn) hybrid securities component of its previously-announced capital raise.
The US dollar-denominated, subordinated bond carries a coupon of 7% and can first be redeemed in 2023, the Hague-based company said in a statement. The bond will be listed on the NYSE Euronext Amsterdam.
The new issue forms part of the capital raise first announced in February. KPN and major shareholder America Movil (AMX) have agreed the issue will be comprised of a €3bn rights issue and €2bn of hybrid securities. The latter are expected to receive 50% equity recognition from ratings agencies. On 14 March, KPN announced it had priced a €1.56bn dual-tranche hybrid bond comprised of a €1.1bn tranche and a £400m tranche.
KPN said proceeds from the new issue will be about €465m. Together, the US$600m issue and the €1.56bn offering complete €2bn hybrid bond issuance, the company said.
Deutsche Bank, Goldman Sachs and JP Morgan acted as joint structuring advisers and bookrunners for both hybrid issues. Credit Suisse and RBS were joint bookrunners for the new issue, while BoA Merrill Lynch and Citi were co-lead managers.
KPN said the proceeds of the hybrid bonds and the proposed €3bn right issue, which AMX has agreed to support in exchange for gaining two seats on the Dutch telco’s supervisory board, will be used to strengthen the company’s capital structure, repay existing debt and invest in operations.
The telco said it expects Moody’s to rate the subordinated bonds Ba1 and Fitch and S&P to rate them BB.
Previously, Fitch assigned KPN’s subordinated perpetual and long-dated capital securities a final rating of BB and the then-proposed US dollar issue an expected rating of BB.
Fitch’s ratings for the hybrid securities fall two notches below the BBB long-term issuer default rating it has assigned to the company.
“[This] reflects the securities’ increased loss severity and heightened risk of non-performance relative to the senior obligations,” the agency explained.
KPN reported revenues for 2012 of €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%.
