Nokia seeks $1 bn to help power fightback
Mobile phone maker Nokia plans to raise 750 million euros ($980 million) by issuing convertible bonds to bolster its cash position as it battles to claw back market share lost to Apple and Samsung.
Once the world's biggest mobile phone maker, the Finnish firm has fallen far behind Apple's iPhone and Samsung's Galaxy phones in the lucrative smartphone market, and is pinning its hopes for recovery on new models that go on sale next month.
With its net cash falling to 3.6 billion euros in September from 4.2 billion in June, and its credit ratings cut to junk over the past year, analysts have said the company needs to show a turnaround in the next several months if it is to survive.
It is a rather cheap way to get extra financing, said Evli analyst Mikko Ervasti of the plan to issue convertible bonds, which are potentially most lucrative to investors when they are converted into shares several years after they are issued.
They need buffers (and) their 2014 bond also requires financing, he added.
Nokia finished the third quarter with 3.8 billion euros in interest-bearing liabilities, with 1.75 billion in bonds and loans maturing in 2014. The company also owns half of network equipment venture Nokia Siemens Networks, which finished the quarter with 1.4 billion euros in liabilities.
The convertible bonds will be due in 2017 and will pay a coupon between 4.25 percent and 5.00 percent. The initial price for conversion into ordinary shares is expected to be 28-33 percent above the average price of Nokia shares between the launch and pricing of the offering.
At 0905 GMT, Nokia shares, which have been volatile in recent sessions, were down 5.1 percent at 2.05 euros.
Nokia's fortunes hinge on its top-of-the-range Lumia 820 and 920 models, which run on Microsoft's new Windows Phone 8 software, come in vivid colours, have high-resolution cameras, and will hit the stores in November.
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