Nokia Siemens Networks, a multinational telecomm joint venture, has seen some rough roads lately with significant losses and negative market sentiment. In an effort to correct both these situations at once, the company plans to sell bonds worth millions of euros in the market this spring. The two-pronged aim of this move is to gauge investor confidence in the company and to raise money that will help bridge the daunting abyss in its balance sheets.
As per reports in the Financial Teams, sources close to the matter said that the company hopes to raise 700 million euros by selling bonds to the public at large. Stuart Stanley, a fund manager at Invesco Asset Management Ltd. in London, was quoted saying that the Nokia Siemens deal is an unsurprising move considering the depth of demand and low yields. Further, he speculated that investors might be discouraged due to the unpredictability of the telecomm market, but will also be interested, as Nokia Siemens is an important global company.
If this high-yield bond offering does gain approval of the company’s board, it will be the second largest bond sale in terms of euros raised this year. The first is information services company, Cerved Group SpA’s 780 million euro sale carried out on January 9th. NSN has taken several cost-cutting measures in the past few months. Last November, it closed down a factory in Germany leading to 650 redundancies, and it is apparently considering shutting down the German services unit altogether. This will take the job-cut count to over a 1000 and bring down costs by about 1 billion euros. These steps plus the 1 billion euro package it received from its parent companies has helped Nokia Siemens show better results lately. This step towards positive revival is likely to be helpful when the bonds hit the market.
The company’s products have also contributed to the recent upward pointing numbers. Demand for its long-term evolution, or LTE, networks spurred sales in the second quarter of last year and NSN saw profits for the first time in a long time last October. That performance persisted, and fourth quarter operating profit was reported at 13 percent. Nokia Siemens’ plans to sell debt largely rely on the company’s most up-to-date sales figures and valuations. In that sense, the half-Finnish and half-German is looking at many millions in the bank!
