It emerged that new provisions in Orange's banking covenants allow British Aerospace, which owns 21 per cent of the operator, to sell a much bigger chunk of its shareholding than previosuly permitted. The change came last month when Orange refinanced its borrowings with a pounds 1.75bn debt facility.
Under the new financing deal, BAe could sell all of its stake in Orange, as long as 1 per cent of the shareholding was bought by Hutchison Whampoa, the Hong Kong conglomerate which owns 49 per cent of the mobile group. The covenants allow the two investors to cut their stake to 50 per cent, compared with the minimum shareholding of 62.5 per cent in the previous financing arrangements.
The news boosted BAe's shares, which jumped 24p yesterday, to pounds 17.90. Orange shares also rose 0.5p to 251p.
BAe confirmed it intended to cut its stake in Orange, worth pounds 630m, but denied speculation that it wanted to sell its entire investment. "Over time we want to drift down to a stake which would be a shade under 20 per cent. But we've got no plans at this stage to reduce our holding," said a spokesman.
Hutchison bought a mobile company from BAe in 1991, leaving the defence and aerospace group with 30 per cent of the business which eventually became Orange. BAe's shareholding was reduced to 21 per cent when the mobile operator floated on the stock market in 1996.Reuse content