Dutch telecommunication firm Royal KPN N.V. (KPN, KKPNY.PK) said an agreement has been reached with its largest shareholder to support KPN in its intention to raise 4 billion euros equity capital. KPN and the mobile-phone carrier América Móvil (AMX) have also inked an agreement setting out the long-term relationship between the two parties.
The capital raise to be backed by AMX would comprise a 3 billion euros rights issue and, in addition, issuance of hybrid capital instruments which are likely to receive partial equity recognition. KPN, with the help of this combination, plans to achieve the targeted 4 billion euros equity equivalent capital. The proceeds of the capital raise would be utilized to reduce KPN's net debt level and to continue to invest in KPN's operations. KPN intends to issue the hybrid capital instruments during the course of 2013.
The term of the Relationship Agreement is indefinite. Both parties may terminate the Relationship Agreement with 2 months' notice; however, KPN has agreed not to terminate the Relationship Agreement during its first 2 years.
For comments and feedback: editorial@rttnews.com