Orange reduces its stake in BT and secures financing at a negative interest rate
Jun 20, 2017
Orange has taken a balanced approach which allows it to reduce the Group’s exposure to BT Group plc (BT), while keeping exposure to a potential future share price increase through its residual stake.
- Sale of one third of its current participation in BT through a private placement of approximately 133 million shares
- BT will place an order for GBP 200 million in the placement of BT shares, at the placement price, part of which for the benefit of its Employee Share Ownership Trust. This order will be fully allocated by Orange
- Simultaneous issue of approximately GBP 520 million bonds due 2021 exchangeable into BT shares underlying another one third of Orange’s participation
- Orange to initially retain a 2.66% stake in BT
Orange announces it has launched the sell-down of approximately 133 million shares that its subsidiary Atlas Services Belgium owns in BT, representing around 1.33 % of the share capital of BT, through a private placement by way of an accelerated bookbuilt offering.
BT will acquire up to GBP 200m in the placement of BT shares, part of which for the benefit of its Employee Share Ownership Trust, at the placement price. Such order will be fully allocated by Orange.
Simultaneously, Orange announces it has launched an offering of bonds exchangeable into BT shares due 2021 for a nominal amount of approximately GBP 520 million, at a premium of 35% to 40% above the share placement price carried out by way of a private placement.
Orange would initially retain a 2.66% stake in BT. In case of exercise in full of the exchange rights underlying the bonds, Orange would retain a 1.33% stake in BT.
The exchangeable bonds, with a maturity of 4 years (except in the case of early redemption), are issued in GBP. They will bear a coupon between 0% and 0.375% and will have negative interest rate after hedging in euros. They will be offered at an issue price of between 100.5 % and 100 % of the principal amount, corresponding to an annual yield to maturity of between -0.125 % and 0.375 %.
The exchangeable bonds are expected to be issued in principal amounts of GBP 100,000 per bond and will be redeemed at par at maturity (except in the case of early redemption).The holders of exchangeable bonds may exercise their exchange right at any time from 7 August 2017 until the 55th calendar day before the maturity date of the bonds. Orange will have the flexibility to settle in cash, deliver ordinary shares of BT or a combination thereof.
The underlying exchange property (being initially only BT shares) will be subject to customary adjustment upon the occurrence of certain corporate events pursuant to the terms and conditions of the bonds.
The final terms of the placement and of the exchangeable bonds issue are expected to be announced on 20 June 2017 at the latest. Settlement for the placement of the BT shares and the exchangeable bonds issue are expected to take place on 22 June 2017 and 27 June 2017 respectively. An application will be made for the exchangeable bonds to be admitted to trading on the Marché Libre d’Euronext Paris.
Orange will agree to a 90-day lock up for its remaining shareholding in BT, subject to waiver from the joint bookrunners and certain exceptions, in particular the possibility to sell BT shares to a strategic investor (provided that this investor agrees to be bound by a similar lock-up commitment) or to monetize scrip dividend.
The proceeds of these transactions will be used for the general corporate purposes of Orange.
The placement of the shares and the exchangeable bonds issue are targeted at eligible institutional and qualified investors. The definitive terms will be determined following the completion of the accelerated bookbuilding process. There will be no public offering in any country.