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Sunrise in fresh move to secure shareholder OK for Liberty Global deal

Swiss telco Sunrise has announced a reduction in the size of the rights issue planned to finance its troubled acquisition of UPC Switzerland in a bid to secure shareholder approval for the deal.

The telco is to reduce the size of the rights issue by CHF1.3 billion (€1.2 billion) to CHF2.8 billion ahead of a planned shareholder meeting on October 23.

The telco is also planning to take an increased absolute dividend in the range of CHF350-370 million for the 2019 financial year to its 2020 AGM, based on the higher than expected number of shares in the company post-rights issue.

Sunrise is also introducing a cash-for-title option enabling shareholders to receive the dividend in cash, newly issued Sunrise shares or a combination.

The company’s debt leverage ratio will increase as a result of the move.

Sunrise said the latest move followed extensive consultation with shareholders, although it is still likely to face the opposition of those most adamantly opposed to the transaction, including Germany’s Freenet, Sunrise’s largest shareholder.

The company’s move follows last week’s approval of the acquisition by regulator WEKO.

Despite the opposition of a growing number of Sunrise shareholders to the terms agreed with UPC Switzerland owner Liberty Global, the latter hasl rejected the idea of making any changes to the agreement and said that it was “fully committed to completing the transaction as agreed”.

Olaf Swantee, CEO of Sunrise said: “Since the announcement of the transaction, we have met with more than 200 investors and received strong support on the strategic and industrial logic of the acquisition. Today’s enhancements to the initially proposed terms reflect the feedback from our shareholders. Following receipt of WEKO approval last week, we are now looking forward to moving swiftly towards completion of the transaction and to creating a stronger and more valuable fully-converged Swiss telecommunications leader for our shareholders.”

Peter Kurer, chairman, said: “The Board is pleased to announce these enhanced transaction terms which are the result of constructive engagement with our shareholders. We are confident that today’s announcement will enable a successful conclusion of the acquisition of UPC Switzerland, which we believe will create a stronger and more valuable Sunrise for all of our shareholders, benefitting from the compelling strategic and financial rationale of the combination. We have full confidence in management’s ability to successfully integrate UPC Switzerland and realize the significant expected synergies from the combination for all Sunrise stakeholders.”