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Print 2 comment(s) - last by Ringold.. on Oct 24 at 6:52 PM

Bond offering will only be available to Europeans, will be converted to shares

Troubled Finnish phone Nokia Oyj. (HEX:NOK1V) is not letting its "junk" credit status stand in its way.  The company announced on Tuesday that it would be looking to raise €750M ($972M USD) in unsecured convertible bonds, due in 2017.

The bond offering will be held on the Frankfurt Stock Exchange Open Market segment. The Frankfurt SE -- known in German as Frankfurter Wertpapierbörse or FWB for short -- is the world's tenth largest stock exchange.

Convertible bonds are a special type of bonds that convert into shares when they mature.  The new bonds can be converted into 287.2 million total maximum shares, roughly 7.74 percent of total shares.

The cash pot at Nokia dipped from €4.2B ($5.44B USD) in June to €3.6B ($4.67B USD) in September.  It also has a fair amount of debt -- €3.8B ($4.93B USD) in interest-bearing liabilities, €1.75B ($2.27B USD) of which matures in two years (2014).  That maturing debt necessitated some sort of money-raising action, analysts commented.

Nokia share prices fell on dilution concerns, but analysts generally praised the decision as a wise financial gambit.  Comments Evli Bank (Finland) analyst Mikko Ervasti to Reuters, "It is a rather cheap way to get extra financing.  They need buffers (and) their 2014 bond also requires financing."

Junk bonds
In a move praised by analysts, Nokia is offering up convertible junk bonds.
[Image Source: CNN]

ING Groep N.V. (AMS:INGA) in a note added, "[The offering] also shows that the company is taking the question marks around its credit quality seriously and is willing to take the steps necessary to improve this."

The bonds will be available Oct. 26.  A press release with full details is available here; however U.S. traders are forbidden by law to view that release and additionally are not allowed to purchase the bonds, according to a disclaimer on the press release.

Nokia is looking to scrounge up cash as it pushes forward to next month's Windows Phone 8 launch.  The company has put its headquarters near Espoo, Finland up for sale.

Sources: Reuters, Nokia [European readers only]



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Which is it?
By Newspapercrane on 10/24/2012 9:34:17 AM , Rating: 2
Headline says that it's 750M USD, the article says €750M ($972M USD). Which is it, Mick?




RE: Which is it?
By Ringold on 10/24/2012 6:52:49 PM , Rating: 3
What's 272M USD among friends? :P


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