Telefonica intends to place a €1.2bn bond and issue €800m of existing treasury shares in a debt for equity swap as part of a share buyback scheme that would cut the telco’s €58bn debt pile by €800m.
The indebted Spanish telco announced…
Telefonica intends to place a €1.2bn bond and issue €800m of existing treasury shares in a debt for equity swap as part of a share buyback scheme that would cut the telco’s €58bn debt pile by €800m.
The indebted Spanish telco announced yesterday, after market close, that it will first buyback €2bn of preference shares, and then issue the bond and ordinary shares.
Providing there is full take up the restructuring would cut €800m from Telefonica’s substantial debt pile.
In a note Bernstein Research said the €800m could shave 0.04x from its net debt/EBITDA ratio and Bernstein believes Telefonica will end the year with a ratio of 2.6x – short of its self-imposed target of 2.35x.
The operator’s newly issued unsecured 10-year notes carry a coupon of 4.184% and are of equivalent nominal value to a preferred share.
Telefonica will offer €800m of treasury stock for the mean of the price its shares trade at between 19 and 23 November, with a minimum price of €9.75 and a maximum of €11.05.
Telefonica has taken other measures recently to tackle its €58bn of debt.
Earlier this week it raised €1.45bn from the float of 23% of Telefonica Deutschland.
In October it also sold its call centre business, Atento, to US firm Bain Capital for €1bn.
Telefonica also halved its stake in China Unicom in July, gaining €1.142bn from the sale of a 4.5% stake.
Telefonica’s CFO, Angel Vila, also suggested the possibility of splitting off Telefonica’s LatAm business to a separate domicile as the company looks to protect itself from Spain’s economic woes.