(Corrects description to accordion feature in fourth paragraph of story published Jan. 23)
Jan. 24 (Bloomberg) -- Nokia Siemens Networks raised 1.26 billion euros ($1.6 billion) of forward-start loans, less than it originally sought, according to two people with knowledge of the deal.
The deal was cut by about 200 million euros by the network- equipment venture of Nokia Oyj and Siemens AG after some lenders pulled out citing volatility caused by the European debt crisis, said the people, who declined to be identified because the deal is private. The loan replaces a 2 billion-euro credit line and syndication to lenders may close this week, the people said.
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 accordion feature, allowing additional banks to provide funding after the deal is signed, the people said.
Ben Roome, a London-based spokesman for Nokia Siemens, declined to comment.
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.
The company said on Nov. 23 it will eliminate 17,000 jobs worldwide, or 23 percent of its workforce.
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