AM indicates support for KPN’s planned capital increase, with some caveats

20 Feb 2013

Reuters reports that Mexico-based America Movil (AM), which is the single largest shareholder in Dutch carrier KPN Telecom (or Royal KPN), has said it will support the telco’s planned rights issue, and would appoint two members of the board subject to a shareholder vote. In a filing to the Mexican stock exchange yesterday, Carlos Slim’s Latin American telecoms giant reportedly confirmed its participation in the offer ‘with a view to strengthening KPN’s capital base, maintaining the fundamentals that support KPN’s investment grade [rating] and allowing KPN to pursue valuable strategic initiatives’. It is understood that AM has struck an ‘indefinite’ agreement with the Dutch group not to take its ownership above the 30% threshold that would trigger a mandatory buy-out of the full group. Analysts are interpreting the move as a sign that Carlos Slim is keen to improve his EUR3 billion (USD4 billion) investment in KPN despite incurring a paper loss since purchasing his shares for around EUR8 each last year. Since then, the carrier’s stock has dipped to EUR3.228 per share (at the close, yesterday).

The issue is expected to comprise a EUR4 billion capital increase and ‘the issuance of hybrid capital instruments, which were expected to receive partial equity recognition’. The agreement may however, be terminated by either side with two months’ notice the Mexican group said, although KPN is not allowed to end the agreement in the first two years.

Netherlands, America Movil (AM), KPN