BT raises £1 bn from investors to fund EE takeover

UK telecom operator, BT has raised £1 billion from investors to help fund its £12.5-billion takeover of EE, The Independent reported today.

Emerging as a winner in the latest Premier League rights auction earlier this week, the telecoms giant placed 222 million shares through a so-called accelerated book-building process, led by JPMorgan, Merrill Lynch and Goldman Sachs.

With the completion of the takeover, BT would be able to offer mobile phone services along with its existing landline, TV and internet products.

EE counted 24 million UK customers, the largest holding of spectrum used for mobile services, as also the most developed 4G network in the country.

"The placing is not conditional upon completion of the acquisition and if the acquisition does not complete, the placing proceeds will be retained by the company and used for general corporate purposes," BT said.

In early February, BT concluded a deal to acquire EE from its owners, Deutsche Telekom and Orange, in a bid to enter mobile telecommunications (See: BT Group seals deal to acquire EE for £12.5 bn).
 
BT on today placed about £1 billion of shares at £4.55 to part finance the transaction, placing 222 million shares through JPMorgan, Merrill Lynch and Goldman Sachs at 1 per cent discount to yesterday's closing price of £4.60

The rest of the EE transaction will be funded by giving stakes in the combined business to Deutsche Telekom and Orange and through existing cash and debt.

Last week BT had said it would undertake the placement after it completed due diligence of the acquisition. The placement works out to around 3 per cent of its market capitalisation. Shares slid 2 per cent to £4.50 on yesterday.

The telecoms group opted for the method of financing the deal in a bid to protect its credit ratings. The group would end up with net debt equal to 1.4 times earnings before interest, tax, depreciation and amortisation excluding pension deficit and operating leases following its acquisition of EE. The ratio stood at 1.0 before the deal.

According to BT, the placment was ''not conditional upon completion of the acquisition and if the acquisition does not complete, the placing proceeds will be retained by the company''.