Telenor scraps $1.6-billion rights issue; to fund Unitech deal with cash and debt

Telenor SA, has withdrawn its proposed $1.6 billion (12 billion krone) rights issue to finance its acquisition of a majority stake in Unitech Wireless, the telecom arm of Indian real estate major Unitech Ltd.

Telenor said it would now raise the money for the acquisition through a combination of cash flow and additional debt.

Telenor said it proposes to scrap payment of dividend to shareholders for the current year and the next year and a final decision on payment of dividend will be made after closing of the financial accounts for 2009.

Telenor has signed an 8 billion kroner three-year term loan for financing the investment in Unitech Wireless.

The deal, however, is subject to certain conditions being fulfilled, and Telenor said it is confident of meeting all conditions within time.

The rights issue was originally to be subscribed by the Norwegian government, which owns 54 per cent stake in Telenor. Telenor officials said the government changed its decision to subscribe to the issue following the economic slowdown and wanted the company to fund the deal on its own.

The company then appointed Deutsche Bank to look for alternate ways of funding.