Sunrise confident on IPO despite Swiss franc rise

Swiss mobile operator Sunrise Communications has played down any effect that the rise of the Swiss franc could have on its SFr1.35bn initial public offering announced earlier this week.
The currency rocketed yesterday after the Swiss National Bank (SNB)…

Swiss mobile operator Sunrise Communications has played down any effect that the rise of the Swiss franc could have on its SFr1.35bn initial public offering announced earlier this week.

The currency rocketed yesterday after the Swiss National Bank (SNB) abandoned its policy of capping its currency to the euro at SFr1.20 to €1 – a measure it introduced earlier in the eurozone crisis.

When Sunrise unveiled its IPO on Wednesday, SFr1.35bn was equivalent to US$1.32bn, whereas now it is equal to US$1.55bn.

The CVC Capital Partners-owned operator said that rather than a negative, the SNB’s decision could actually prove to be a positive for the company.

A Sunrise representative said it had net costs in foreign currencies, mainly in euros and US dollars, which have now become cheaper to the Swiss franc.

“The effect is rather neutral to positive for Sunrise,” the company said. “Thus, we do not see any need to change our IPO plans after the decision of the SNB.”

A listing could come in mid-February and value Sunrise at close to SFr5bn, reports have suggested.

The proceeds from the float will be used to delever Sunrise’s balance sheet and reduce the cost of its debt, allowing it to exploit future growth opportunities, the company said.

Sunrise has also said it plans to buy back a total of US$1.8bn bonds in February providing the IPO completes successfully. It will redeem its SFr300m and €275m tranches of PIK toggle notes due 2019, and its SFr370m 5.625% senior secured notes due 2017 and €167m of floating rate senior secured notes due 2017, in full.

Sunrise also plans to redeem €451m of its 8.5% senior notes due 2018 and SFr121m of its 7% senior secured notes due 2017.

The operator added that it could refinance more of its bonds and would also be looking to replace its senior revolving credit facility with new bank financing.

Fitch has placed Sunrise on ratings watch positive as it anticipates the IPO will enable the telco to significantly delever. Sunrise hopes to reduce its net debt-to-EBITDA ratio to 2.7x after the IPO – down from 3.6x in Q3 2014.

Deutsche Bank and UBS are running the IPO. Morgan Stanley and Berenberg are acting as additional joint bookrunners, and Bank Vontobel is co-lead manager. Lilja & Co is acting as the independent adviser to CVC and Sunrise.

Sunrise is the second-largest telecoms operator in Switzerland after Swisscom. For the 12 months ending 30 September 2014, it declared revenues of SFr2bn and EBITDA of SFr621m.