France Telecom Cancels $7 Billion Offer Amid Market Volatility, Sources Say
Dow Jones Newswires
France Telecom SA will cancel its $7 billion public offering of shares,
according to banking sources close to the transaction.
The French government had planned to sell 5% of the company's stock to
investors, while France Telecom had planned to initiate a 5% capital
increase, in part to pay for its purchase of a stake in Deutsche Telekom
AG, by issuing a convertible bond.
The combined value of the deal's two tranches had been pegged at $7
billion, which would have made it one of the year's biggest offerings
alongside Swisscom AG.
France Telecom wasn't immediately available for comment, and officials
from the lead bank, Banque Paribas, refused to comment.
Bankers had hoped for the offering to help restore sentiment, which has
been battered along with global equity markets. But there had been
concerns that the offering could be tainted by market volatility and the
steep declines in two large French IPOs earlier this year and September's
stunning profit warning from market favorite Alcatel SA, which have
soured investors on French shares.
The government sold an initial 22.5% stake to the public last fall and said
this summer it would sell another stake. The government has set plans to
hang onto a majority stake of between 62% and 63%.
Sources said the offering could have been done for around 325 pence per
share, but said it was preferable to pull the placement rather than accept
such a low price.
The spectre of the capital increase had weighed on France Telecom's
shares in the past week. Speculation about the cancelation sent shares up
24 French francs, or 6.9%, to 370 francs in Paris Friday. In New York
Stock Exchange trading, France Telecom's American depositary receipts
rose $7 at $68.25. |
