* Plans to raise 955 mln euros from shareholders
* To issue high-yield bond of $750 mln
* New revolving credit facility worth 500 mln euros
* Moves are part of CEO's turnaround effort
* Shares down 2.6 percent, trimming recent gains
(Adds detail on share issue, updates shares)
By Leila Abboud
PARIS, Nov 4 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
"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.
"In the past few months, we have gotten renewed confidence
from customers and the market, and this allowed us to proceed
immediately with these three financial operations today," he
said on a conference call.
"They will help the company manage its own destiny and
The strengthening of Alcatel-Lucent's finances will also
give it more options at a time when speculation has been
mounting that consolidation lies ahead among telecom equipment
makers. In September, Reuters reported that Nokia was discussing
internally whether to approach Alcatel-Lucent about a tie-up or
buying its wireless unit, funded by proceeds it will get from
the sale of its handset business to Microsoft.
Combes' strategy is to streamline Alcatel-Lucent to focus on
IP networking products, which help telecom operators carry
mobile data traffic, and high-speed mobile and fixed broadband.
The new shares will be offered to current holders of
Alcatel-Lucent stock, who will be given one right for every
share they own as of Nov. 18. A shareholder needs 41 rights to
be able to buy 8 of the newly issued shares.
Between 454,722,512 and 460,000,000 shares will be issued,
with the subscription period running from Nov. 19 to Nov. 29.
Holders of shares in the United States will not be eligible
for the share issue, the company said a statement.
The 955 milllion euros of expected proceeds from the share
sale compare with Alcatel-Lucent's current market capitalisation
of about 7 billion euros.
The company likely chose to carry out a capital increase now
because the shares have been surging on hopes for its latest
turnaround plan - up almost 200 percent this year, compared with
a 21 percent rise in the European tech index
The group also reported third-quarter results last Thursday
that sent the shares up nearly 20 percent.
Since June, Combes has reprofiled Alcatel's debt maturities
significantly, reducing the amount due by the end of 2016 to 876
million euros from 2.03 billion.
Once the share sale and bond are carried out, the company
intends to repay 2014 and 2015 debt issuances, Chief Financial
Officer Jean Raby said on Monday.
After the moves, the group's net debt will be roughly
between "break even" and 50 million euros, he added.
As of Sept. 30, the group's net debt was 1 billion euros.
The capital increase is underwritten by banks including
Merrill Lynch, Crédit Agricole, and Deutsche Bank as global
coordinators. Citigroup, J.P. Morgan Securities, Goldman Sachs,
HSBC Bank, Morgan Stanley and Natixis are also joint
($1 = 0.7414 euros)
(Additional reporting by Alexandre Boksenbaum-Granier; Editing
by Geert De Clercq and Mark Potter)