FILE PHOTO: Swiss telecom company Sunrise’s logo is seen at its headquarters in Opfikon, Switzerland February 18, 2019. REUTERS/Arnd Wiegmann/File Photo
ZURICH (Reuters) – Liberty Global (LBTYA.O) has offered to buy up to 500 million Swiss francs ($502.11 million) in newly created Sunrise Communications shares (SRCG.S) – a move aimed at rescuing the 6.3 billion franc sale of its Swiss business.
Sunrise wants to raise 2.8 billion francs to finance the purchase of cable operator UPC, but the plan has run into opposition from investors who have said it is overpaying and were concerned Liberty Global was not taking part in the deal.
“Liberty Global has agreed to support the Sunrise rights offering up to an aggregate amount of 500 million francs through the purchase of tradeable subscription rights at market prices and the subsequent purchase of newly issued shares, if any, in the rights offering,” the company said on Monday.
If fully utilized, Liberty Global’s ownership would reach 7.8% at current market prices, while Liberty Global will also receive one board seat as long as its shareholding exceeds 5%.
Sunrise shareholders will vote on the capital increase needed to complete the deal on Oct. 23, with a Reuters survey showing at least 30% of Sunrise shares, including German group Freenet (FNTGn.DE), against the capital hike.
Sunrise, which competes with state-controlled Swisscom (SCMN.S), needs a simple majority to back the equity issue, which has been scaled back from 4.1 billion Swiss francs originally planned.
Proxy adviser ISS has recommended shareholders vote against the rights issue. Other proxy advisors Glass Lewis, Ethos, and zRating have recommended Sunrise shareowners approve the capital increase which would pave the way for Switzerland’s biggest telecoms deal.
“We have always believed in the logic of this combination. It creates a national powerhouse that will provide a fully-converged challenger to Swisscom and represents a smart and accretive transaction for both Sunrise and Liberty shareholders,” said Mike Fries, CEO of Liberty Global.
“We are also happy to support the financing. Both investors and consumers win when this deal closes.”
Reporting by John Revill, editing by Riham Alkousaa and Stephen Coates