Freenet to pay down debt with Sunrise bonanza: CEO

BERLIN (Reuters) - Freenet FNTGn.DE is being richly rewarded for its bet on Swiss telecom Sunrise SRCG.S after backing Liberty Global's LBTYA.O $7.4 billion takeover, and will use most proceeds to pay down debt, CEO Christoph Vilanek said.

The German telecoms investor has signed a binding agreement to tender its 24.2% stake at 110 Swiss francs after the Sunrise board backed Liberty’s cash offer. It paid 70 Swiss francs.

“It’s a fair valuation,” Vilanek told Reuters. “We believe that a merger on sensible terms makes sense.”

He anticipated no antitrust obstacles after Switzerland’s cartel authorities raised no objections to a proposed deal last year for Sunrise to buy Liberty’s Swiss cable unit UPC. Freenet’s opposition effectively scuppered that deal.

Freenet will reap 1.1 billion euros ($1.29 billion) in proceeds from the sale, from which it will repay 800 million in debt as required under its loan covenants.

As a result, its leverage ratio will fall to around 2 times, below its target level of 2.5. “That is very healthy,” Vilanek said.

Reporting by Douglas Busvine; editing by Thomas Seythal