* Exchange price at 20 pct premium
* Annual interest 1.25 pct for four years
* Investors baulked at initial guidance of 0.375-1.00 pct
* Part of portfolio repositioning by GBL (Updates after completion of placement)
BRUSSELS, Jan 24 (Reuters) - Belgian holding company GBL plans to cash in almost half its stake in French energy firm GDF Suez with 1 billion euros ($1.33 billion) of exchangeable bonds, raising cheap cash to diversify.
GBL, run by Belgium’s richest man, Albert Frere, said on Thursday it had sold the four-year bonds at an annual coupon of 1.25 percent, a low level but above the initial guidance of between 0.375 percent and 1 percent.
GBL was forced to revise its offer after investors baulked at terms they considered too expensive, IFR reported.
The bonds will convert into GDF Suez shares in 2017 at a premium of 20 percent over a price based on Thursday’s trading level, though GBL could choose to pay back bondholders in cash.
GBL has already sold its stake in chemicals company Arkema , part of its stake in drinks maker Pernod Ricard and about 400 million euros of bonds exchangeable into shares of Suez Environnement. The combined sales have raised about 1.4 billion euros.
KBC Securities said the latest sale was unexpected, but that it brought GBL cheap funding and allowed it to reduce an investment that had underperformed in recent years. GDF Suez shares have lost about half their value over the past four years.
“The company is repositioning itself; thinking about its future, thinking about its capital allocation,” KBC Securities analyst Tom Simonts said.
GBL said that it would also take a 758 million euro impairment on its 5 percent stake in GDF Suez, the shares of which fell 25 percent last year.
In addition to its GDF Suez stake, the Belgian company holds 21 percent of cement company Lafarge and 4 percent of oil major Total.
Chief Executive Frere said that he considered the remaining stake in GDF Suez to be an important asset and he remained confident in the energy group’s prospects.
“It is in this context that GBL has chosen a financial instrument providing exposure to the future, the share price appreciation and at the same continued collection of the dividends,” Frere said in a statement.
GDF Suez said: “As our shareholder explains, this is a financing operation for them. This operation has no impact on the shareholding of GDF Suez, since GBL will maintain its participation, the exchange only taking place in January 2017.”
GBL shares closed up 0.49 percent at 61.73 euros, against a 0.07 percent gain on the STOXX Europe 600 Utilities index .
Bookrunners for the placement are BNP Paribas Fortis, Deutsche Bank, Societe Generale Corporate & Investment Banking and UBS. Rothschild is acting as financial adviser. ($1 = 0.7530 euros) (Reporting By Ben Deighton; Additional reporting by Geert De Clercq in Paris; Editing by Philip Blenkinsop and Helen Massy-Beresford)