Hutchison launches more bond sales to help boost 3G coffers

17 Nov 2003

Hong-Kong based conglomerate Hutchison Whampoa will today begin selling USD5 billion worth of bonds to help refinance some of the debt accrued during its purchase of numerous third-generation (3G) mobile licences and the subsequent rollout of services across Europe. It is understood that Hutchison has almost USD3 billion of bonds and USD5 billion of loans falling due in 2004, most of which are associated with the company’s purchase of 3G concessions in the UK, Italy, Austria, Ireland, Sweden, Denmark, Australia and Israel. The company, which has already sold USD4.5 billion worth of bonds this year, is planning to sell the latest batch of US-denominated bonds in three tranches with maturities of seven, ten and 30 years. It has refused to name the banks coordinating the sale, although local press reports suggest that Merrill Lynch, HSBC, Citigroup and Goldman Sachs have been hired.

Hutchison is coming under increasing pressure from shareholders and investors to show a return on its 3G investments, but its business plan has been blighted by a series of technical glitches and the lower than anticipated subscriber take-up. In the next few weeks the operator is expected to announce customer levels for its European networks, but these are unanimously expected to fall well short of the two million connections it is targeting across its UK and Italian operations by the end of 2003. In June Hutchison’s debt rating was downgraded by Standard & Poor’s to A-, just three levels above the lowest investment grade.

Hong Kong