Swiss Phone Company Sunrise Plans $1.3 Billion Stock Sale

Sunrise Communications AG, Switzerland’s second-biggest wireless provider, plans to raise about 1.35 billion francs ($1.3 billion) to cut debt in the Swiss stock exchange’s largest initial public offering in more than eight years.

Proceeds from the sale, planned for the first half of this year, may also fund growth, Chief Executive Officer Libor Voncina said today on a call with reporters. CVC Capital Partners, the private-equity fund that owns about 90 percent of the company, will reduce its stake in the sale, Sunrise said.

Competition is heating up in the Alpine country where Swisscom AG, the dominant phone company, offers flat rates for mobile subscriptions for 59 francs to 169 francs a month. Billionaire Xavier Niel, known for sparking a cellular price war in France, agreed to buy third-place carrier Orange Switzerland for 2.8 billion francs last month.

“It is the right time for us because we have made big investments in network, product line and customer service improvement,” Voncina said, adding that the Orange deal didn’t affect the IPO decision.

Niel may seek to merge Orange with Sunrise to better compete against Swisscom, a person familiar with the situation told Bloomberg in December. His discounted carrier Iliad SA offers mobile subscriptions of voice and data as low as 19.99 euros ($23.55) per month in France.

Greenshoe Option

CVC Capital Partners agreed to pay 3.3 billion francs for Sunrise in 2010. The private equity fund will probably remain the largest shareholder, Sunrise Chief Financial Officer Andre Krause said on the call. He couldn’t confirm if CVC will retain a majority stake. The investor may offer shares in a so-called greenshoe option, which would increase the size of the IPO by 15 percent, Sunrise said.

“I would expect CVC to remain a large reference shareholder,” Thorsten Pauli, who leads the Swiss Equity Capital Markets team at UBS Group AG, said today by phone, adding that the offering will be among the largest for the bank in the first quarter in Europe. “CVC is committed to the IPO and a trade sale is not considered.”

The Swiss company didn’t disclose what percentage of the equity or the number of shares it plans to sell, or the price range.

Sunrise had sales of 2 billion francs and earnings before interest, taxes, depreciation and amortization of 621 million francs in the year through September, it said in a statement. The company estimates that sales and adjusted Ebitda for the calendar year 2014 rose 2 percent to 3 percent, with an operating margin exceeding 33 percent.

Deutsche Bank AG and UBS are joint global coordinators and joint bookrunners for the IPO. Morgan Stanley and Berenberg are additional joint bookrunners, and Bank Vontobel AG is co-lead manager.

Swiss refiner Petroplus Holdings AG raised 2.9 billion francs in a November 2006 IPO.

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