Struggling networking equipment maker Alcatel Lucent SA (NYSE:ALU) (EPA:ALU) said Monday that it plans to raise $2.7 billion to finance its restructuring efforts. Alcatel Lucent SA (NYSE:ALU) (EPA:ALU) CEO Michel Combes has clearly taken advantage of the soaring stock. Shares of the French-American company have surged more than 200% since Combes took over as the chief executive officer of the company in April.
Alcatel regains investor confidence
The company said Monday that it plans to issue between 454.7 million and 460 million new shares at 2.10 euros to raise about $1.3 billion (955 million euros). That’s a 29% discount compared to its closing price on November 1. The Paris-based company will sell $750 million in high-yielding bonds, and will receive 550 million euros in revolving credit facility, reports Leila Abboud of Reuters. The company will offer new shares to its current shareholders between November 19 and November 29. Alcatel Lucent SA (NYSE:ALU) (EPA:ALU) shareholders can buy one new share for each share they already own. The company said in a statement that its U.S. shareholders will not be able to participate in the offering.
Gates Capital's ECF Value II fund was up 9.4% for the first quarter, compared to the HFRI Event-Driven Index's 8.2% gain, the Russell 2000's Value Total Return Index's 21.2% gain, and the S&P 500's 6.2% return. Q1 2021 hedge fund letters, conferences and more Gates Capital Management is an event-driven value . . . SORRY! Read More
Alcatel Lucent SA (NYSE:ALU) (EPA:ALU) has beaten the consensus estimates over the past two quarters. Its third quarter revenues surged 7% to $5.05 billion. It has given investors some confidence in Michel Combes’ restructuring plan. Moreover, it will help Combes negotiate better deals with potential buyers as he sheds off some of the company’s assets. Michel Combes announced his plan in June, which included 1 billion euros in asset sales, 1 billion euros in cost savings and 10,000 job cuts. Alcatel Lucent SA (NYSE:ALU) (EPA:ALU) is facing stiff competition from low-cost Chinese vendors.
Alcatel to reduce its debts to zero
Alcatel Lucent SA (NYSE:ALU) (EPA:ALU) CFO Jean Raby said that once the transactions announced today are completed, the company’s debts will be close to zero. As of September 30, the French-American company has net debt of 1 billion euros.
The company had raised loans from Credit Suisse Group AG (NYSE:CS) and Goldman Sachs Group Inc (NYSE:GS) by using its patent portfolio as collateral. Alcatel Lucent SA (NYSE:ALU) (EPA:ALU) plans pay off its loans and gain full control over its patents. The company was formed in 2007 through the merger of Alcatel SA and Lucent Technologies. Over the past seven years, the company has seen three CEOs, several restructuring plans and massive job cuts.
Alcatel Lucent SA (NYSE:ALU) (EPA:ALU) shares went down 2.31% to $3.80 in pre-market trading.