Ericsson Says Share Issue Was Oversubscribed
Associated Press
STOCKHOLM -- Telefon AB L.M. Ericsson on Friday labeled its 30-billion-Swedish-kronor ($3.2 billion or €3.23 billion) rights issue a success and said it would strengthen the company's position in the beleaguered telecommunications market.
The Swedish wireless-equipment maker said demand far outstripped supply of the nearly eight billion new shares being sold at 3.80 kronor apiece.
Ericsson's preliminary results showed more than 99.5% of those with rights to buy new shares exercised their rights, the company said.
Requests were received for an additional 2.5 billion shares and the leftover shares will be parceled out among those applicants, the Stockholm-based company said.
Ericsson has said it will use the money to pay off debt and finance a restructuring package that will bring total employment below 60,000 by next year, from 107,000 in 2001.
"We believe that the telecom market is a long-term growth market and with the rights offering we now have the confidence and security of a strengthened financial position," chairman Michael Treschow said.
The successful outcome had been widely expected by the market since the shares were being offered at a steep discount. Shareholders were offered one new share for each share they already owned, meaning their stake in the company would fall by half if they did not subscribe.
Ericsson shares were up 8.1% at 6.65 kronor in afternoon trading in Stockholm.
"This gives them a little breathing room, but they're not yet out of the woods. There are still some risks associated with the liquidity position," said Thomas Langer, an analyst at WestLB Panmure. Ericsson, which has reported six straight quarterly losses, has struggled amid a severe slump in demand from operators as they delay investments in their networks. The company's shares have fallen more than 90% from their peak in March 2000. |
