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.