YOU ARE AT:Archived ArticlesORANGE OWNERS PLAN IPO TO RE DUCE COMPANY DEBT

ORANGE OWNERS PLAN IPO TO RE DUCE COMPANY DEBT

At least one quarter of U.K. wireless telecom operator Orange plc will be floated next month through a global offering of common shares, announced Dewe Rogerson, which manages Orange’s account.

Hong Kong-based Hutchison Whampoa Ltd. currently owns about 68.5 percent of Orange, while British Aerospace plc holds a 31.5 percent stake. In the offering, total shares sold will be deducted proportionally from the two owners. It is expected Hutchison’s stake will drop to about 50 percent.

The sale of stock is motivated by two key forces, explained a source close to the offering, who requested anonymity. Orange wants to reduce debt owed to existing shareholders and as such will apply all proceeds from the offering to its debt. Also, as a private company, Orange has no material valuation. A public sale of stock will allow Hutchison Whampoa and British Aerospace, both public companies, to realize that valuation. They want “to see a return on their investment,” the source commented.

Orange has prepared separate prospectuses for its global offering of ordinary shares in London, Europe at large, Canada, the United States and Asia.

Orange, launched in April 1994 by Hutchison Telecommunications Ltd., competes for customers with personal communications network services operator Mercury One 2 One, as well as cellular carriers Vodafone plc and Cellnet. However, Orange’s present system does not allow customers to roam outside the United Kingdom, while customers of Vodafone, Cellnet and can. Mercury will launch roaming options in several countries this spring, said the company.

To address the capacity constraints of its competitors’ analog frequencies, Orange’s digital-only service pledges, “We always have room for you,” in its 1996 marketing campaign. Moving customers from analog to digital has been stimulated by the issue of security as well as capacity. Orange’s network currently carries 400,000 customers, but can support up to 10 million users. About five million people presently use mobile phone service in the United Kingdom.

Goldman Sachs & Co. and Kleinwort Benson Group plc are joint coordinators for the global offering. Additional underwriters may be announced later.

ABOUT AUTHOR

Editorial Reports

White Papers

Webinars

Featured Content