Nokia Siemens Networks is seeking a forward-start loan for 1.5 billion euros ($2 billion) to ensure it can renew credit agreements that expire next year, according to three people with knowledge of the deal.
The borrowing for the network-equipment venture of Nokia Oyj (NOK1V) and Siemens AG (SIE) becomes effective in June to replace a 2 billion-euro credit line, said the people, who declined to be identified because the deal is private. It comprises a one-year term loan and a revolving credit expiring before June 2015.
Forward-start loans, created to provide liquidity to cash- strapped borrowers during the credit crisis, lock in financing before debt comes due in exchange for higher fees and interest rates. At their peak in 2009, European issuers had $42 billion of forward-starts outstanding, according to data compiled by Bloomberg.
Nokia Siemens, based in Espoo, Finland, hired eight bookrunners for the loan, the people said.
“We are looking at how to manage our external debt maturities in the normal course of business,” Ben Hunt, a London-based spokesman for Nokia Siemens, said in an e-mail reply. “We have always explored multiple options to strengthen our financing.” He declined to elaborate on refinancing plans.
Nokia Siemens agreed to pay an initial interest of about 350 basis points more than the euro interbank offered rate for the 2 billion-euro deal signed in 2009, according to data compiled by Bloomberg. A basis point is 0.01 percentage point. The deal was increased from 1.5 billion euros after lenders offered more than it sought, Bloomberg data show.
The company said on Nov. 23 it will eliminate 17,000 jobs worldwide, or 23 percent of its workforce, in its biggest cut to narrow the gap with market leader Ericsson AB.
Nokia Siemens had a 13.2 percent market share in 2010, tied with Alcatel-Lucent for third place in the mobile infrastructure market, according to researcher Gartner Inc. It followed No. 1 Ericsson with 34.1 percent and Huawei Tech Investment Ltd. with 15.6 percent.
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