- Telefonica (TEF +1%) plans to sell €750M ($1B) in 3-year debt that converts into Telecom Italia (TI +3.7%) shares. The debt will carry an interest rate of 5.25%-6%.
- A source tells Reuters the offering will allow Telefonica to cut its take in TI to ~5% from a current 14.8%. Another says it could pave the way for Telefonica to fully liquidate its stake, though no decision has been made.
- The first source: "This is a way for Telefonica to sell part of its stake in Telecom Italia while ensuring against downside risk if the shares lose value in the next three years."
- The offering follows attempts by Telefonica to get TI to sell Brazilian subsidiary TIM Participacoes (TSU -0.3%), thereby strengthening its balance sheet and appeasing regulators unhappy Telefonica has both a stake in TI and control of TIM rival Vivo (VIV +0.8%). Unloading the TI stake gives Telefonica an alternate way of keeping regulators happy.
via seekingalpha.com
