Alcatel-Lucent seeks to raise $2 billion for recovery drive

Mon Nov 4, 2013 8:56am EST
 
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By Leila Abboud

PARIS (Reuters) - Loss-making telecom equipment maker Alcatel-Lucent plans to raise 955 million euros ($1.3 billion) from shareholders and $750 million from a high-yield bond to cut debt and drive what its boss has called a last-ditch effort to save the group.

Chief Executive Michel Combes launched his "Shift" plan in June, including 10,000 job cuts, 1 billion euros of cost savings and 1 billion of asset sales. He is aiming to revive a firm which has struggled against low-cost Asian competitors as well as larger rivals Ericsson and Nokia since its creation in 2006.

The Franco-American company said on Monday it planned to sell new shares at 2.10 euros apiece, a hefty discount to the current share price.

At 1315 GMT, Alcatel-Lucent shares were down 2.6 percent at 2.89 euros, after falling as much as 9.3 percent. Shares often fall after the announcement of a new share issue, which can dilute earnings per share for existing investors.

Analysts and traders said the fundraisings, which were accompanied by plans for a 500 million euro syndicated revolving credit facility, were not a surprise, but came earlier than expected, probably due to a recent surge in the firm's shares.

"After the sharp rise in the shares last week, the fall this morning is relatively small," said Franklin Pichard, a director at Barclays Bourse, which advises investors and owns Alcatel-Lucent shares.

"That means that Alcatel is no longer feared by investors," he said, adding he planned to take part in the capital increase.

Combes, who has pledged to slash Alcatel-Lucent's debt and had earlier flagged that a capital increase might be needed, said the fundraisings were a key part of his turnaround plan.   Continued...

 
The logo of the telecom equipment maker Alcatel-Lucent is seen on the company site building in Rennes, western France, October 15, 2013. REUTERS/Stephane Mahe