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KPN Takes First Hurdle to Bolster Balance Sheet With Bonds

Royal KPN NV (KPN), the Dutch carrier partly owned by Carlos Slim’s America Movil SAB, took the first hurdle to bolster its balance sheet by raising as much as 1.56 billion euros ($2 billion) in a hybrid bond sale.

KPN sold 1.1 billion euros of perpetual bonds yielding 6.125 percent that can be redeemed in 2018 and a 400 million- pound ($601 million) tranche of 60-year notes at 6.875 percent that can be redeemed in 2020, according to a statement from the Hague-based company yesterday.

“What we’ve experienced during the roadshow in the past few weeks is that investors started believing in the KPN story again,” Chief Financial Officer Eric Hageman said in a phone interview. “The bonds were oversubscribed by six times,” he said, adding the company is very satisfied with the pricing.

KPN shares rose as much as 3.4 percent and advanced 3.1 percent to 2.79 euros at 10:10 a.m. in Amsterdam, extending yesterday’s rise. The shares plunged in the past two years amid stagnant revenue and abortive attempts to sell its Belgian unit and merge its German operations with those of Telefonica SA. (TEF)

The hybrid bond sale is part of the capital raise the company announced on Feb. 20, consisting of a 3 billion-euro share sale and as much as 2 billion euros of hybrid capital instruments that are expected to receive 50 percent equity recognition.

Slim Support

The Dutch carrier is raising funds to cope with the rising cost of maintaining high-speed networks for devices like Apple Inc. (AAPL)’s iPhone. KPN spent 1.35 billion euros acquiring wireless spectrum in the Netherlands in December.

America Movil (AMXL) agreed to support the capital-raising plan in return for nominating two people to supervisory board.

“They did a good job with the bond sale and got a reasonable price,” said Jos Versteeg, an analyst at Theodoor Gilissen Bankiers, adding the commitment from Carlos Slim gives investors confidence. “It doesn’t seem to be an issue for the company to raise capital.”

After yesterday’s “encouraging” sale, Hageman said he will travel to the U.S. next week as KPN is looking to raise about 500 million euros in dollar notes.

To contact the reporter on this story: Maaike Noordhuis in Amsterdam at mnoordhuis@bloomberg.net

To contact the editor responsible for this story: Simon Thiel at sthiel1@bloomberg.net

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