Ericsson in cut-price cash call
SWEDISH phone equipment giant Ericsson has launched a massively discounted 30bn kronor (£4.4bn) rights issue. The issue of shares at a price not seen since 1992 will be fully underwritten due to current stock market conditions, the company said.
The group, desperate to cut costs, also said it would shed 5,000 more jobs, raising its expected cull to 22,000 staff by the end of next year. It had 94,000 employees a year ago.
Shareholders will be offered one new share for every one they own at just 3.8 kronor compared with today's 11.5 kronor, down three kronor. The shares have fallen 72% since the loss-making group revealed its fund-raising plans in April.
Chief executive Kurt Hellström said he expected the market for mobile phone systems to fall by 15% this year against a 10% fall predicted three months ago. Ericsson lost 3.5bn kronor in the three months to the end of June, from losses of 5.4bn kronor in the first quarter. Hellström said he planned to return to profit 'some time in 2003'.
The billionaire Wallenberg family's Investor investment vehicle, which together with Industrivarden has voting control of Ericsson, said it would take up 5bn kronor of the rights issue.
