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Slim Said to Seek Conditions for Supporting KPN Stock Sale
By Matthew Campbell & Amy Thomson - Feb 13, 2013 2:34 PM GMT+0100
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Carlos Slim, the world’s richest man, is seeking changes at Royal KPN NV that may give him greater influence on its management before agreeing to support the Dutch phone company’s planned 4 billion-euro ($5.4 billion) share sale, according to people familiar with the matter.
America Movil SAB, the Slim-backed company with a 28 percent stake in KPN, may impose conditions including a seat on KPN’s board and the replacement of Chief Executive Officer Eelco Blok, the people said, asking not to be identified discussing a private matter. America Movil will almost certainly not participate in the rights issue unless at least some conditions are met, said the people. KPN shares pared gains in Amsterdam trading.
KPN is among European phone companies looking at asset sales and capital raising to cope with rising costs of maintaining high-speed networks for devices like Apple Inc.’s iPhone. Under Blok, who took over in 2011, KPN’s shares have plunged more than 70 percent amid stagnant sales and abortive attempts to sell its Belgian unit and to merge its German operations with those of Telefonica SA.
America Movil “has no incentive to subscribe to a rights issue let alone buy KPN,” Sanford C. Bernstein analyst Robin Bienenstock wrote in a note today. “We are deeply pessimistic about potential long-term value creation at KPN and would argue that there is a real possibility that KPN ends up in the hands of creditors if there is no rights issue.”
Position Unclear
Stefan Simons, a KPN spokesman, declined to comment, as did a representative for Mexico City-based America Movil.
Shares of The Hague, Netherlands-based KPN dropped almost 6 percent from their intraday price after Bloomberg News reported the discussions. They traded at 3.25 euros as of 2:31 p.m. in Amsterdam. They fell as much as 25 percent on Feb. 5, the day KPN announced the rights issue. Blok said on that day that Slim’s position was unclear.
America Movil bid 8 euros-a-share for its KPN stake last year. KPN shareholders are set to vote on the share sale proposal at a meeting on March 19.
“We will question the need of the enormous rights issue,” said Jasper Jansen, an economist at the shareholder lobby group VEB, which represents holders of about 1 million KPN shares. “Shareholders are bleeding with the dilution that is taking place. We won’t exclude voting against the rights issue.”
The former Dutch phone monopoly spent 1.35 billion euros on acquiring new wireless spectrum in the Netherlands in December. It faces a new challenger there from Sweden’s Tele2 AB, which will offer consumers mobile services after buying its own spectrum in the same auction.
Moody’s Investors Service rates KPN’s debt Baa2, the second-lowest investment grade. Standard & Poor’s ranks the debt one step lower, at BBB-.
To contact the reporters on this story: Matthew Campbell in London at
mcampbell39@bloomberg.net; Amy Thomson in London at
athomson6@bloomberg.netTo contact the editors responsible for this story: Kenneth Wong at
kwong11@bloomberg.net; Jacqueline Simmons at
jackiem@bloomberg.net