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KPN to raise $4.4 billion
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November 21, 2001: 3:45 a.m. ET
Debt-crippled telecom company to sell shares to existing investors to cut debt
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LONDON (CNN) - Debt-crippled KPN Telecom plans to raise  5 billion ($4.4 billion) through a share sale after posting on Wednesday a third-quarter loss.
Chief Executive Ad Scheepbouwer, who took over the post on November 1 after this predecessor was ousted following two failed attempts to find a merger partner and reduce debts of about 23.2 billion, has moved quickly to cut cost and restructure the business.
"We believe that the offering strengthens our financial, and therefore negotiating, position and will allow us to resist disposals of non-core assets on unfavourable terms," said Scheepbouwer.
The Dutch company, which announced plans to slash about 4,800 jobs in late October, spent billions on buying third-generation, or high-speed, mobile phone licences, that give it the right to offer wireless Internet and video services.
KPN, the Netherlands biggest phone company, also paid 9.1 billion for E-Plus Mobilfunk, Germany's third-biggest mobile phone operator. The company said it would write down the value of E-Plus in 2002 by between 9 billion and 11 billion.
The move is an acknowledgement that it overpaid for acquisitions at the height of the telecoms boom. NTT DoCoMO, Japan's biggest mobile phone company, is to write off ¥308 billion ($3 billion) of its investment in KPN Mobile, the Dutch company's mobile phone unit.
KPN posted a third-quarter net loss of 231 million, compared with a profit of 1.95 billion in the same period a year ago after NTT DoCoMo bought a 15 percent stake in KPN Mobile.
In the three months to September 30, KPN's third-quarter loss, excluding exceptional cost, was 341 million. Sales rose to 14.2 percent to 3.2 billion.
KPN hopes the share offer to existing investors will reduce its debt to 14 billion by the end of 2002. British Telecommunications raised a similar amount earlier this year, spun off its mobile phone business mm02 and sold international assets to reduce its debt pile to about £17 billion from more than £27 billion.
KPN said its offering was 65.31 percent, fully underwritten by a syndicate of banks, with the Dutch government committed to the remainder. The banks will sell the shares for not less than 2.75 and are targeting a value for the shares of 4.05. The subscription period runs from November 22 to December 6.
The company's stock, which has lost more than 50 percent of its value this year, fell 5 percent to 5.70 in early Amsterdam trading on Wednesday. The stock has risen more than 25 percent this week amid speculation that the company would announce plans to raise money to pay for its debts.
KPN shares have been as high as 18.36 on January 22 and as low as 2.03 on September 6. 
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