FINNISH mobile phone maker Nokia yesterday unveiled plans to raise €750 million (£610m) as it attempts to stay in the race with Apple, HTC and Samsung.
Nokia will raise the funds through a bond issue to fund the launch next month of handsets running the latest Windows 8 operating system.
The company – which has lost market share to its rivals in recent years – is also shoring-up its balance sheet ahead of €1.8 billion-worth of bonds that are due to be repaid during 2014.
Mikko Ervasti, an analyst at Evli, said: “It is a rather cheap way to get extra financing. They need buffers and their 2014 bond also requires financing.”
All three of the main credit ratings agencies had previously downgraded Nokia’s bonds to “junk” status, promoting analysts to say the company needs to show a turnaround in the coming months if it is to survive.
The company cash reserves fell from €4.2bn in June to €3.6bn last month, with its liabilities sitting at €3.8bn.
Timo Ihamuotila, Nokia’s executive vice-president and chief financial officer, said: “This offering is designed to further strengthen our financial position and liquidity profile while allowing us to benefit from the current attractive long-term financing opportunities in the convertible bond market.”
Analysts at ING welcomed the launch of the bond. They said: “It shows that the company is taking the question marks around its credit quality seriously and is willing to take the steps necessary to improve this.”
Bank of America Merrill Lynch, Barclays, Citi and Deutsche Bank are acting as joint bookrunners for the bond.
Nokia yesterday launched its lower-priced Lumia 510 phone, an updated version of its previous Lumia 610 model.
But it is the launch next month of Nokia’s top-of-the-range Lumia 820 and 920 models that will prove key for the firm. The company hopes that the phones – which will run the latest version of Microsoft’s software – will be a big hit in the run-up to Christmas.
Earlier this month Nokia unveiled plans to sell its head office in Finland as part of a €1.6bn cost-cutting programme that has already seen 10,000 staff lose their jobs.
The company will maintain its base in the Scandinavian country but selling the glass and steel structure known as “Nokia House” near Helsinki is one of the options the struggling mobile phone maker is considering as it disposes of property.
Third-quarter results unveiled last week showed that revenues had dropped by 19 per cent year-on-year to €7.2bn, with operating profits falling by 69 per cent to just €78m after demand for smartphones fell.
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Weather for Edinburgh
Saturday 18 May 2013
Temperature: 9 C to 13 C
Wind Speed: 18 mph
Wind direction: North east
Temperature: 9 C to 18 C
Wind Speed: 8 mph
Wind direction: North east