Telecom equipment maker Nokia Siemens Networks (NSN) has raised more than $1.5 billion from a group of 14 European and U.S. banks as it looks to restructure the business and pay costs of a big redundancy program, a source close to the deal said on Monday. NSN was originally seeking to raise $1.9 billion, but had to settle for a smaller amount due to market turmoil, the source added.
Owners Nokia (Espoo, Finland) and Siemens (Munich, Germany) bailed out NSN (Espoo, Finland) with an additional $1.2 billion of equity last year after attempts to sell the business failed, but the loss-making venture has said it would not seek more money from its parents.
NSN, which has struggled to make a profit since being set up in 2007, was formed in the hope of building enough scale to lead an industry dominated by Swedish company Ericsson (Stockholm, Sweden) and, increasingly, by Chinese entrants.
The world's second largest mobile telecom equipment maker has faced aggressive pricing from rivals and an economic downturn that has forced telecoms companies to cut spending. NSN said in November it was axing 17.000 jobs, almost a quarter of its workforce. As a result NSN has been selling off parts of its business, including its WiMax and fixed line broadband business.
Earlier, the Financial Times newspaper said, without citing a source, that about $772 million would be provided as a one-year term loan that would need to replaced when it expires in the summer of 2013, with the remainder coming on a three-year term.
A source cited by the FT said NSN would look at raising money in the capital market through issuing bonds, which it hoped would be available before the expiry of the one-year debt.
The banks involved in the deal include JPMorgan, Citibank, Bank of America, Royal Bank of Scotland and Standard Chartered.
NSN needed to replace a $2.5 billion debt facility set to expire this summer and which was used to support corporate activities.
Nokia or Siemens could not be reached for immediate comment.
(Reporting by Tarmo Virki and Stephen Mangan; editing by Miral Fahmy and Mark Potter)