By
Telecom Lead Team: Nokia Siemens Networks has raised more than
1.2 billion euros of finance from a consortium of 14 European and U.S. banks in
a bid to overhaul its dwindling business.
As
per the deal, about 600 million euros will be provided as a one-year term loan
— in effect a short-term corporate bridging loan – that will need to be
replaced when it expires in the summer of 2013. The remainder is on a
three-year term.
In
addition, NSN would look at raising money in the capital market through issuing
bonds, which would be available before the expiry of the one-year debt,
according to a media report.
The
banks involved in the deal include JPMorgan, Citibank,
of America, Royal Bank of Scotland and Standard Chartered.
NSN
has also kept the option of adding more banks to the group in the first quarter
to provide additional money given delays caused by the uncertain economic
climate at the end of last year.
NSN
is going through a tough phase and struggling to compete with other telecom
equipment manufacturers across the globe. The company announced 17,000 job cuts
in November last year against a backdrop of poor corporate lending.
The
equipment vendor recently sold its WiMax wireless and fixed line businesses to
NewNet Communication Technologies and ADTRAN respectively. With these deals,
NSN had also transferred over 700 employees to NewNet and ADTRAN.
Nokia
and Siemens had to bail out NSN with additional 1billion euros of equity last
year due to its loss making streak.
NSN
has faced aggressive pricing from rivals and an economic downturn that has
forced telecoms companies to cut spending. Nokia Siemens Networks had the
lowest operating margin among the leading telecom equipment providers in the Q3
2011. Nokia Siemens
Networks‘ operating margin in Q3 2011 stood at -3.3 percent compared
with -9.6 percent in Q3 2010 and -3 percent in Q2 2011.
