CWC shares crashed 72.5p to 598.5p as Bell Atlantic, the US group which owns 18.5 per cent of the company, announced plans to raise "in excess of $3bn" in interest-bearing notes exchangeable into CWC shares.
Bell, which last week unveiled a $53bn (pounds 33bn) merger with GTE, the US long-distance operator, plans to price the bonds at a premium to the CWC share price, effectively mortgaging the expected future returns from the shares. When they mature the bonds will be exchangeable into CWC shares or cash.
An analyst said investors had reacted badly to another load of CWC stock hitting the market. Bell Canada recently placed its entire shareholding in the group with institutions. Experts also criticised the structure of the issue. "This is effectively Bell Atlantic wanting to have their cake and eat it," said one.
Frederic Salerno, Bell chief financial officer, said the issue would "realise some of the substantial value" of the investment in CWC. Bell would use the proceeds for business opportunities and debt reduction.
Bell acquired its shareholding from Nynex, the cable operator which was part of the merger which created CWC.Reuse content