Europe's largest maker of car-navigation devices maker TomTom NV plans to raise €430 million in a fully committed rights offer through a private placement. The Amsterdam-based company plans to use the proceeds to pay down debt.
According to the manufacturer, its lenders have agreed to change the terms of its financial covenants to allow 'greater headroom.'
''The equity offering we have announced today provides us with a substantially strengthened balance sheet,'' chief executive officer Harold Goddijn said in the statement.
The company intends to go for a rights offer to divest €359 million of equity and €71 million through a private placement.
Around €169.3 million worth of shares will be taken up by the four founders including Janivo Holding BV and Cyrte Investments BV.
The underwriters to the issue include ABN AMRO Bank NV, Deutsche Bank AG, Goldman Sachs International, and Rabo Securities, according to TomTom.
The private stock placement will be priced at €6.1234 per ordinary share.
At the end of the first quarter, TomTom's net debt stood at €1.159 billion and from net proceeds of the issue, debt will be reduced to about 700 million euros.
The company's shares had risen last week following the roll out of a new navigation application for Apple's iPhone and again on reports that the US group was set to take a stake in TomTom.
However, according to Goddijn, Apple had not approached TomTom. According to analysts the rights offering in combination with the announcement that Apple is not interested to take a stake will probably take away speculation of a bid on the shares.
TomTom NV is a Dutch company engaged in the manufacture of navigation devices and design of software applications for use in mobile devices such as PDAs and mobile telephones. The company is the leading manufacturer of navigation systems in Europe with its customer service located in Amsterdam, the Netherlands. Its navigation devices and portable devices with installed software are called units.
TomTom units incorporate a flying interface with an oblique bird's-eye view of the road coupled with a direct-overhead map view. The units connect with a GPS receiver to precisely locate the destination and the route to it. Some TomTom systems also integrate with mobile phones via Bluetooth.