Sunrise Communications Deal of UPC acquisition is on risk after several shareholders opposing the deal despite the slash of previously projected rights issue to 2.8 billion francs from 4.1 billion.
Swiss group Sunrise Communications projected 6.3 billion franc (Swiss) acquisition of cable operator UPC from Liberty Global is on risk of rejection by its shareholders as several investors are standing against the deal despite the amended rights issue.
Sunrise needs a simple majority to make equity issue of worth 2.8 billion franc for UPC deal. Swiss company had slashed the right issue to 2.8 billion francs from its previously planned 4.1 billion francs. The equity issue was announced by the company to fund its purchase of Liberty Global’s Swiss UPC business.
Final details are probable after the Sunrise shareholders meeting on October 23 in which the company has to approve the capital increase. Sunrise aims to win market share by UPC acquisition and compete the market leader Swisscom.
Much smaller rights issue can make trouble for company after several investors criticizing the price and deal structure. So the company’s debt component will rise at an extraordinary meeting on Oct. 23 for the transaction to proceed.
German Freenet company said it will not sell its shares in Sunrise Communications. However, Freenet was opposing and urging others against the original plans for a rights issue that values more than Sunrise’s market capitalization.
After facing the opposition Sunrise has worked on the solving the matter by finding the ways and discussed with investors to reduce size of equity for rights issue to fund the 6.3 billion franc deal and overcome the concerns of Freenet which is largest shareholder of the Sunrise.
Sunrise expects to get a simple majority at the Extraordinary Meeting as the company hopes, “A majority of our investors are behind this transaction.”