KPN tackles debt with £3.1bn rights issue

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KPN, the loss-making Dutch telecoms company, yesterday announced plans to tackle its crippling debt mountain with a 5bn euros (£3.1bn) rights issue, following in the footsteps of British Telecommunications and Sonera of Finland.

Analysts said the move, which came as KPN revealed it would take a 9bn to 11bn euros write-down on its investment in the German mobile company E-Plus, would avert the risk of KPN debt dropping to junk status.

The company said it intended to cut its 22.3bn euros of debts, amassed during recent heavy spending sprees, to 14bn euros by the end of 2002. It will continue to sell non-core businesses and other assets, while focusing on its core markets in the Netherlands, Germany and Belgium.

The Dutch government pledged to buy about 1.7bn euros of new shares to maintain its 34.7 per cent stake. A consortium of banks agreed to underwrite the rest. KPN brought forward third-quarter results, revealing a net loss of 231m euros for the three months to end-September compared with a 1.95bn euros profit (boosted by NTT DoCoMo's purchase of the KPN Mobile stake) last time. Turnover fell 37 per cent to 3.18bn euros.