Sunrise sets price range for SFr1.35bn IPO

Switzerland’s second-largest mobile operator, Sunrise Communications, has set the price range for its initial public offering at between SFr58 and SFr78 per share.
The CVC Capital Partners-owned telco is eyeing proceeds of SFr1.35bn (US$1.5bn) from…

Switzerland’s second-largest mobile operator, Sunrise Communications, has set the price range for its initial public offering at between SFr58 and SFr78 per share.

The CVC Capital Partners-owned telco is eyeing proceeds of SFr1.35bn (US$1.5bn) from the listing and envisages a market capitalisation in the region of SFr3.1bn (US$3.4bn).

Sunrise will issue between 17.3 million and 23.3 million new shares – depending on where the IPO prices – and CVC will sell 4.3 million of its existing shares.

Sunrise and CVC have also agreed to a greenshoe with the banks working on the deal whereby CVC would sell a further 4.1 million of its shares, which can be exercised within 30 days of when Sunrise’s stock starts trading.

The book-building process began today and is expected to end on 5 February. Sunrise’s stock will then start trading on the SIX Swiss Exchange on 6 February under the ticker symbol SRCG.

Sunrise expects that it will have a free float of between 58.8% and 65.7% following the listing, assuming the over-allotment option is exercised.

Deutsche Bank and UBS are running the IPO. In addition, 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.

The proceeds from the float will be used to de-lever 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. 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 de-lever. Sunrise hopes to reduce its net debt-to-EBITDA ratio to 2.7x after the IPO – down from 3.6x in Q3 2014.

The announcement of the IPO came days before 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.

The moved rocked currency markets around the world but Sunrise played down any effect that the rise of the Swiss franc could have on its offering.

The operator said that rather than a negative, the SNB’s decision could actually prove to be a positive for the company. A Sunrise representative explained it had net costs in foreign currencies, mainly in euros and US dollars, which have now become cheaper to the Swiss franc.

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.