Not only bond holders but also two investment banks are likely to participate in a share issue to save the neck of telecommunications operator Netia. The first independent operator to challenge the monopoly of TPSA is now under heavy pressure having stopped paying bond holders and now a share issue is aimed at converting these bonds.
The Warsaw operator owes JP Morgan Chase Bank and Merril Lynch around USD50m. This sum will be added to the pool of credit on bonds to be swapped for shares.
Netia has paid of some of its debts but needs to the share swap in order to cover all of them.
Netia is unable to release the full details of the deal but suffice to say that both creditors and debtor managed to find common ground.
Bond holders paid around USD850m for Netia papers which now have a market value of around USD170m.
It is not yet clear how Netia will resolve the problem of its other debt. The American investment bank Pincus Warburg, bought Netia shares signing a contract with Telia in which the former could demand that the Swedes bought the stock back for them at USD25 per share. This would mean that Telia would have to find over PLN300m for shares that are worth only around PLN14m at current prices.
Netia is now unlikely to face bankruptcy. The bond holders and investment banks will take ninety percent of the stock in the new company and then Telia will also take some of the stock as Netia will continue to need financing. The price of these shares is not yet clear although it certainly will have nothing to do with the current price of the stock on the bourse.
Shareholders are due to meet on 19 February although they will have little choice but agree to these life saving deals.© ℗
Podpis: Alan Heath