Bloomberg News

Telefonica Cuts Debt by 776 Million Euros With Shares Exchange

November 28, 2012

Telefonica SA, Europe’s most indebted phone operator, said an exchange of preferred shares for bonds and treasury stock will reduce its debt by 776 million euros ($1 billion).

Acceptance for the offer, announced on Oct. 31, has reached 97.1 percent of the outstanding total, the Madrid-based company said in a filing to regulators today.

Chief Executive Officer Cesar Alierta is reversing a decade-long acquisition spree that expanded the company’s debt. For the exchange of preferred shares, the company had offered to buy back the securities on condition investors reinvest the proceeds in newly issued bonds and shares currently held as treasury stock.

The share price for the exchange was fixed at 10.1642 euros per share and the company will issue 1.16 billion euros of 10- year bonds as a result of the swap, Telefonica (TEF) said.

This month, Telefonica said its net debt had shrank to 52.8 billion euros from 58.3 billion euros in June. Its year-end target is 50 billion euros.

To contact the reporter on this story: Charles Penty in Madrid at cpenty@bloomberg.net

To contact the editor responsible for this story: Simon Thiel at sthiel1@bloomberg.net


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