A group of 14 U.S. and European banks has loaned Nokia Siemens Networks more than $1.56 billion to help the company restructure its business and pay costs of its redundancy program. According to Reuters, the company was originally hoping to raise close to $2 billion but market turmoil made that impossible and the company had to settle for the smaller amount.
NSN announced in November it would
shed or shutter unrelated businesses and focus exclusively on the mobile
broadband market. The company also said it would cut 17,000 workers by 2013,
for a total cost savings of around $1.34 billion. The removal of 17,000
positions will reduce NSN's total workforce by 23 percent.
The facility consists of a
one-year term loan of about 628 million euros, and a three-year portion for the
same amount, said the person. Royal Bank of Scotland Group Plc and Nordea Bank
AB coordinated the deal, the people said, and were joined by 12 further banks
in syndication including Bank of America Corp., Citigroup Inc., JPMorgan Chase &
Co. and Standard Chartered Bank.
The company may be able to
increase the loan in future because the agreement has a so-called call-in
feature, allowing additional banks to provide funding after the deal is signed,
the people said.
Forward-start loans, created to
provide liquidity to cash- strapped borrowers during the credit crisis, lock in
financing before debt comes due in exchange for higher fees and interest rates.
At their peak in 2009, European issuers had $42 billion of forward-starts
outstanding, according to data compiled by Bloomberg.
Nokia Siemens agreed to pay an
initial interest of about 350 basis points more than the euro interbank offered
rate for the 2 billion-euro deal signed in 2009, according to data compiled by
Bloomberg. The deal was increased from 1.5 billion euros after lenders offered
more than it sought, Bloomberg data show. A basis point is 0.01 percentage
point.
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