Nokia Corporation (ADR) (NOK) To Redeem 800M Euro Of Senior Notes

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Nokia Corporation (ADR) (NOK) To Redeem 800M Euro Of Senior Notes
Hermann / Pixabay

Nokia Corporation (ADR) (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V) has announced plans to redeem senior notes worth 800 million euros to reduce its interest payments. The company revealed in a statement yesterday that it will redeem the senior notes issued in March 2013 by Nokia Solutions and Networks Finance BV, the finance company of its networks business formerly known as NSN.

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Nokia aims to enhance capital structure

By redeeming 800 million euro senior notes, the company will save annual interest expenses of around 55 million euros starting in the third quarter of 2014. Also, redemption will incur a one-time cost of 100 million euros affecting the second quarter 2014 results of the company.

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Senior notes are preferred by debt holders as they have priority if a company goes into liquidation. The Finnish company announced a capital structure program on April 29th 2014, which aims at reducing interest bearing debt as well as other targets.

“Nokia has announced that it plans to reduce interest bearing debt by about 2 billion euros by the end of the second quarter 2016,” it said.

Further, Nokia Corporation (ADR) (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V) said that cutting of debt amount will bring in annual run rate saving of at least 100 million euros related to the recurring interest costs. Furthermore, reducing the debt substantially will enhance Nokia’s position to become an investment grade company.

Nokia has more institutional ownership

According to the latest reports, institutional ownership in Nokia Corporation (ADR) (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V) is more than 25% in contrast to the previous reports where it was only around 11.34%. The higher percentage reflects confidence and support for the company, which is transforming itself from a device-making company to a diversified infrastructure, digital mapping and intellectual property company.

Seppo Sahrakorpi, a computational physicist at Pilvi Computing Inc., said in his recent blog that institutional ownership of Nokia is more than reported, and the report of 11.34% institutional ownership is based only on America Depository Receipt shares at the New York Stock Exchange.

Nokia is primarily listed on Helsinki stock exchange as it is a Scandinavian company. According to Sahrakorpi, around 10.3% of Nokia Corporation (ADR) (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V)’s float in Helsinki is institutionally owned.

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Aman is MBA (Finance) with an experience on both Marketing and Finance side. He has worked as a Risk Analyst for AIR Worldwide, and is currently leading VeRa FinServ, a Financial Research firm. Favorite pastimes include watching science fiction movies, reviewing tech gadgets, playing PC games and cricket. - Email him at amanjain@valuewalk.com
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