Telecom Italia Plans $1.7 Billion Mandatory Convertible Bond
Telecom Italia SpA (TIT) will issue equity-linked bonds worth up to 1.3 billion euros ($1.7 billion) as it reported quarterly profit fell 27 percent, missing analyst estimates.
The company approved the issuance of mandatory convertible bonds and reported third-quarter net income of 505 million euros, according to statements issued following a board meeting in Milan today. That compared with the 524.6 million-euro average estimate, according to data compiled by Bloomberg.
The company said adjusted net debt totaled 28.2 billion euros at the end of September, and it sees cutting that to below 27 billion euros by the end of the year.
Chief Executive Officer Marco Patuano met with directors today to discuss possible alternatives to a 2 billion-euro capital increase. It was the board’s first meeting since Franco Bernabe stepped down last month after clashing with top shareholder Telefonica SA. (TEF) Telecom Italia lost its investment-grade rating from Moody’s Investors Service last month and is awaiting the results of Standard & Poor’s review this month.
The mandatory convertible bonds, due November 2016, will pay a coupon of 5.75 percent to 6.5 percent, according to the statement. They’ll be convertible into common and savings shares. The final terms are to be announced tomorrow.
Telecom Italia revenue should be “substantially stable” for the year compared with 2012, according to the statement.