Sunrise Shareholder Freenet Needs Time To Decide On UPC Deal

Sunrise’s top shareholder, German group Freenet, needs time to decide whether to support the Swiss group’s plans to buy Liberty Global’s UPC cable business, Freenet CEO Christoph Vilanek told Reuters. Freenet holds 24.5 percent in Sunrise.

At Sunrise’s AGM on 10 April, Freenet blocked plans to extend the Swiss company’s right to issue fresh capital until 2021, which could have helped finance its bid to buy UPC.

The takeover was announced in February. A separate shareholder meeting will decide on the USD 4.1 billion capital increase needed to push that through.

Freenet needs time to decide. The process of forming an opinion will take two or three months, Vilanek said to Reuters.

Sunrise plans to raise more fresh capital for the deal than the company is now worth, triggering resistance among some Sunrise investors. However, management has expressed confidence it will win backing for the transaction.

According to Vilanek, they would have to inject a billion Swiss francs and they don’t have it. By not taking part in the rights issue, Freenet’s Sunrise stake could fall to 6-9 percent.

The date for the extraordinary general meeting needed to approve the capital hike has not been set while the deal goes through regulatory review. That gives Freenet time to see how business develops at Sunrise and UPC, whether regulators demand concessions and where Sunrise’s stock price stands.

Freenet’s CEO thinks they will have significantly more data points with half-year results published in early August.

He again criticized the structure of the proposed deal, saying he would prefer a merger in which Liberty Global bore some of the risks.―Telecompaper