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Hutchison 3G UK taps shareholders for £1bn loan
What a difference a delay makes
Hutchison 3G is to start dishing out handsets in Italy on March 10 and in the UK on March 15. It says it will have 700,000 available within three months.
Which means that the revenues will start coming in very soon. But how much revenue? Hutchison is gunning one million subscribers apiece in the UK and Italy by year's end, two very ambitious targets for the greenfield 3G network.
And money is tight, with cashflow assumptions
torpedoed by delays in launching the 3G phone network -
So H3G UK has gone cap-in-hand to its three biggest shareholders for a loan of £1 billion.
The biggest shareholders are parent company Hutchison, Royal KPN and NTT DoCoMo. It's a given that Hutchison will stump up its share of the money - £650 million; it's a possible that NTT DoCoMo will cough up; but KPN is more problematic. The Dutch company last year said it wanted to sell its 15 per cent stake in Hutchison 3G. NTT and KPN say they will announce their responses to the cash call by mid-April, Bloomberg reports.
Hutchison 3G owes its banks £1 billion, drawn from a £2 billion credit line arranged in 2001. Payment is due in March 2004, but Hutchison 3G is seeking a one-year extension. According the Hong Kong Economic Times (paraphrased by Bloomberg), creditors "asked Hutchison 3G UK to increase its capital because the company failed to meet financial targets required by lenders".
The £1 billion shareholder loan will ensure that H3G remains fully-funded, the company says. ®