Alcatel-Lucent (ALU) recently offered 750 million Euros ($1.07 billion) convertible bonds maturing in 2015, which may be increased by as much as 15% for an over-allotment option. The principal purpose of the offering is to refinance debt, extend its maturity and enhance the company’s financial position.
Alcatel-Lucent will use all or part of the proceeds to repurchase some of its outstanding debt, including a 1.02 billion Euro convertible bond due in 2011. The nominal value of each bond will correspond to an issue premium of 35% over the reference share price on Euronext Paris and bear interest between 5% and 5.5% per year. The conversion / exchange ratio of the bonds will be one new or existing Alcatel-Lucent share per bond, subject to potential adjustments.
The bonds will bear interest at a rate of 5% to 5.50% per annum payable semi-annually in arrears on Jan. 1 and July 1 of each year, starting 2010. The bonds will be issued at par on Sept.10, 2009 and will mature and be redeemed in cash at par on Jan. 1, 2015. They may be redeemed early at the option of Alcatel-Lucent subject to certain conditions. Determination of final terms of the issue is expected today. The expected date of issue and settlement and delivery for the Bonds is Sept. 10.
Alcatel-Lucent is the trusted partner of service providers, enterprises and governments worldwide, providing solutions to deliver voice, data and video communication services to end users. A leader in fixed, mobile and converged broadband networking, IP technologies, applications and services, the company leverages the unrivalled technical and scientific expertise of Bell Labs, one of the largest innovation powerhouses in the communications industry. Its major competitors include Cisco Systems Inc. (CSCO) and LM Ericsson Telephone Co. (ERIC). We currently have a Neutral recommendation on Alcatel-Lucent.
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