Nokia Corporation (ADR)(NYSE:NOK) is in fighting mode.
The handset maker has decided to shore up its warchest of funds in order to
better battle it out with its rivals in the marketplace.
It is seeking to raise about $1 billion from bonds by
issuing convertible bonds.
The bonds, which mature in 2017, carry a coupon rate
of 4.25 to 5 percent. The initial price for conversion into ordinary shares is
expected to be 28-33 percent above the average price of Nokia shares between
the launch and pricing of the offering.
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The Finnish handset maker has fallen behind players
such as Samsung and Apple in an industry segment which it has dominated for
decades.
Earlier this year, it lost its position as the largest
maker of mobile phones to Korea's Samsung Electronics, which is powering ahead
with its partner Google.
While Nokia reported third quarter results which were
better than what the Street had expected, the company's cash position fell to
3.6 billion euros at the end of September from 4.2 billion in June.
Its credit rating has sunk to junk status over the
past year and analysts have pointed out that it needs to show that it is
capable of turning around in the next several months if it has to survive.
The company has been taking several measures over the
past few months to stay in the game and also, possibly move ahead. It junked
its trusted Symbian operating system and has allied itself with Microsoft's
Windows operating system for mobile.
It launched a couple of smartphones, Lumia 920 and
Lumia 820, last month, and they go on sale in November. The success of the
Lumias is crucial to the company.
Nokia finished the third quarter with 3.8 billion
euros in interest-bearing liabilities, with 1.75 billion in bonds and loans
maturing in 2014. The company also owns half of network equipment venture Nokia
Siemens Networks, which finished the quarter with 1.4 billion euros in
liabilities.
Shares of NOk tumbled 7% in the opening session.
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