Zegona raises equity as it moves to take over Vodafone Spain

Source: Vodafone

Zegona Communications, the UK investment outfit that has struck an agreement to acquire Vodafone España, has taken a key step to secure funding for the deal by successfully completing the placement of an offer of shares with institutional investors to raise €300 million.

Zegona placed shares with institutional investors at a price of 150p per share, raiding gross proceeds of €300 million, or £262 million.

Zegona has also entered into an agreement with Newco, the unit set up for the acquisition, for the latter to subscribe to New Zegona shares at the offer price converted to euros by using the proceeds of the issue of the subscription by Vodafone of preference shares in Newco.

Newco is expected to subscribe to New Zegona shares for an aggregate €900 million, representing Vodafone’s investment in Zegona’s acquisition of its Spanish unit.

The New Zegona share price is a premium of 380% of existing Zegona shares. The new shares being issued represent about 99% of the company’s ordinary share capital.

Zegona had previously said it intended to raise between €300-600 million in equity as part of the acquisition financing. The remainder, excluding Vodafone’s €900 million, is to come from debit of about €4.2 billion and a revolving credit line of €500 million.

Zegona, previously the leading shareholder in northern Spanish operator Euskaltel prior to its takeover by MásMóvil, agreed the acquisition of Vodafone’s Spanish operation last month.

Under the terms of the deal, Zegona will be able to use the Vodafone brand in Spain for up to 10 years post-completion of the acquisition.

Vodafone and Zegona will enter into other transitional and long-term arrangements for services including access to procurement, IoT, mobile roaming and carrier services.

Zegona intends to install José Miguel García, the experiences Spanish telecoms exec who was chief executive of northern Spanish cable operator Euskaltel under Zegona’s direction and helped put that company in shape for its acquisition by MásMóvil, as CEO. García also previously served as CEO of Jazztel ahead of its acquisition by Orange.