Alcatel-Lucent Offers to Buy Back Up to EUR750 Million in Bonds
By Inti Landauro
Published April 30, 2013
Dow Jones Newswires
Telecom equipment maker Alcatel-Lucent Tuesday launched a tender offer to buy back as much as 750 million euros ($976.92 million) worth of outstanding bonds maturing in 2014, 2015 and 2016 in a bid to reduce interest payments and extend the maturity of its debt, the company said in a filing to the French market regulator.
Alcatel-Lucent will use part of the proceeds of a EUR2 billion emergency loan package granted by a group of banks led by Credit Suisse and Goldman Sachs in January. The company had to pledge its most valuable assets, mainly its portfolio of patents and much of the U.S. portion of its operating business as collateral to secure the bank loan.
The buy-back offer will expire on May 15 and results will be released the next day, Alcatel-Lucent said.
Citigroup (C) and French investment bank Natixis will manage the deal, the company said.
One of the largest telecom-equipment companies in the world by revenue, Alcatel-Lucent, whose stock has fallen more than 80% in the last six year, lost EUR1.37 billion on EUR14.45 billion in 201, as a result of a write-down. The company has been struggling over the past years to keep up against competitors such as China's Huawei.
The company appointed a new CEO in February.
Does anyone know at what price they are offering to buy back debt? Can they get a discount? Certainly, granting GS a security in its patents did not help older debt holders, and perhaps the huge decline in its cash position last quarter will frighten these people to sell their debt at a discount? That would be a major plus for ALU as it would improve their net cash position. But perhaps debt holders believe the GS loan gives them enough cash to pay their debts in full and won't accept a discount.
There is supposedly more info at the ALU website, which I have not seen in detail. However, I believe a substantial amount of the buy back is via a dutch auction. So it is possible that ALU might save some cash.