KPN’s got issues

25 April 2013 By Quentin Webb

The Dutch telco is asking shareholders for 3 bln euros of fresh funds. A sizeable 35 percent discount is justified by the deal’s size. KPN is moving decisively to shore up its balance sheet. But it still cannot breathe easily: brutal competition will continue at home and abroad.

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On April 25, KPN of the Netherlands announced a 3 billion euro rights issue that will treble the company’s share count. For every share an investor holds, she will be entitled to buy one right at 1.06 euros that will allow her to subscribe for two new ordinary shares. The price represents a 35.1 percent discount to the “theoretical ex-rights price” of KPN’s shares.
Trading in the rights will run from April 26 to May 14. AMX, the Mexican telephone company controlled by Carlos Slim, the world’s richest man, has committed to maintain its current 29.77 percent stake by subscribing to the issue.
KPN has already raised equity and debt finance by issuing 2 billion euros of hybrid bonds. Including the bonds, the rights issue is the second-biggest ever in the Netherlands, Thomson Reuters data show, behind ING’s $11.09 billion cash call in 2009. It is the fourth-biggest rights issue by a telecommunications company, behind rights issues by France Telecom, Deutsche Telekom and BT.

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