PARIS — Alcatel-Lucent is seeking to raise $2.7bn through a combination of new shares and debt, taking advantage of a stock that has almost tripled since CEO Michel Combes took over to finance the network-equipment maker’s overhaul.
The plan includes the sale of €955m in new stock at €2.10 apiece. That is 29% less than Friday’s close. Alcatel-Lucent is selling $750m in high-yield bonds and getting a €500m revolving credit facility, the Paris-based firm said on Monday.
With proof that Alcatel-Lucent is regaining confidence from lenders and the stock market, Mr Combes, who became CEO in April, has a stronger hand to play during negotiations with potential buyers of company assets. Fresh capital would also allow the network supplier to compete more aggressively for contracts with Ericsson and Chinese rivals such as Huawei Technologies.
"In the past few months we have gotten renewed confidence from customers and the market," Mr Combes said.
The cost of insuring Alcatel-Lucent loans as measured by credit-default swaps fell 32 basis points to 312, the lowest since December 2007, the data showed. The contracts are down from about 920 basis points at the start of the year.
Merrill Lynch, Credit Agricole and Deutsche Bank are among banks working on the financing.
Simon Poulter, a Paris-based spokesman for Alcatel-Lucent, declined to detail how the roles are split among the banks on the equity, bonds and loan components.
The quest to make Alcatel-Lucent profitable started when the company was created through the 2006 merger of Alcatel and Lucent Technologies.
CEO changes, job cuts and restructuring have failed for almost seven years, as the company tallied more than $10bn in losses. To see a turnaround through, Mr Combes will have to sell €1bn worth of assets in the coming months.
He faces a tough market, with equipment prices under pressure and European phone companies curbing spending.
Finnish rival Nokia Solutions and Networks reported a 26% slide in third-quarter revenue. Ericsson, the largest maker of wireless networks, missed profit-margin estimates on stiffer competition with Huawei and ZTE.