Numericable launches €4.7B rights issue to finance SFR deal

Numericable announced plans to raise its capital by around €4.7 billion ($5.9 billion) through a rights issue, as the France-based cable operator seeks funding to help finance its €13.5 billion acquisition of SFR from Vivendi.

The Altice-owned company said it would offer €17.82 per new share with a subscription ratio of 15 new shares for seven existing shares. The subscription period will start on Oct. 31 and end at the close of trading on Nov. 12. Altice, which owns 74.59 per cent of Numericable, has already confirmed that it will take part in the rights issue.

Earlier this week, France's competition authority approved Numericable's plan to buy and merge with SFR, although approval is subject to certain conditions being met. As things stand, the deal is due to be closed by the end of the year.

Numericable and Altice said the principal commitments they have undertaken include the disposal of some assets including Altice-owned Outremer Telecom's mobile business, stores in Reunion Island and Mayotte, and Completel's DSL network.

In addition, the cable operator is being forced to temporarily open up its various networks to others, with a wholesale offer to be provided on the optical local loop of Completel and SFR. Furthermore, Numericable is to provide two access offers on its cable network: one for mobile virtual network operators (MVNOs) that do not have a network; and one for network operators that use their own client interfaces.

Finally, Vivendi and Numericable must refrain from sharing any crucial market information where the two companies are competitors; Vivendi is to have a 20 per cent stake in the combined entity.

Numericable commented that the sole hurdle remaining to the completion of the deal is the approval by Numericable shareholders at a meeting on Nov. 27 of Vivendi's contribution of about 25.4 per cent of SFR's share capital to the company. Vivendi would then hold 20 per cent of Numericable Group's capital, taking into account the capital increase.

Once the deal is completed, a new converged player will emerge on the French telecoms market to take second place behind Orange and ahead of Bouygues Telecom.

Numericable also said this week that it swung to a third-quarter loss of €94.4 million in 2014 compared to a profit of €12.8 million a year earlier, because of costs related to the planned SFR takeover.

Vivendi also published unaudited results for SFR that showed a 19.2 per cent decline in EBITDA to €1.7 billion in the first nine months of 2014. The drop reflected litigation costs of €196 million accrued in the second and third quarters and lower revenue. Excluding non-recurring items, EBITDA fell by 10.3 per cent to €1.9 billion.

Including Telindus revenue from May 1, revenue decreased by 2.9 per cent to €7.3 billion. Vivendi noted that the revenue trend improved in the third quarter compared to the first half of the year.

For more:
- see this Numericable release on the capital raising
- see this Numericable release on the SFR deal
- see SFR's provisional results statement

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