Nokia Siemens Networks needs US$1.44bn injection for restructuring

Wednesday, August 17, 2011

Nokia (NYSE: NOK) and Siemens (NYSE: SI) would have to invest at least 1bn euros (US$1.44bn) in their JV, Nokia Siemens Networks (NSN), to restructure the company after failing to attract private equity interest, German magazine Capital reported, citing an unnamed source close to the company.

Last month, Nokia and Siemens completed a review to assess private equity interest in their JV with no new parties interested in ownership of the company.

In light of the results, NSN decided to continue its efforts to generate cost savings, and take further steps to improve its competitiveness as a standalone entity as part of a turnaround plan.

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"NSN needs at least 1bn euros of fresh money from their partners," the source was quoted as saying. "There is no other option" to implement the foreseen restructuring.

According to the report, the company's credit lines worth 2bn euros expire in June 2012 and will have to be renewed.

The company is also reportedly planning a high-yield bond of up to 2bn euros.

Nokia Siemens Networks' 1Q11 results show the company has made good progress on its turnaround plan, marking a third successive quarter of year-on-year net sales growth, as well as a fifth quarter of non-IFRS operating profits since it announced its strategy shift in November 2009, the company previously reported.

Global net sales were up 17% year-on-year in the first quarter of 2011 to 3.17bn euros, while non-IFRS operating profits were 704mn euros.