Global Equity Deal of the Year, European Equity Deal of the Year — France Télécom rights issue

  • 30 Jan 2004
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Punching up the right numbers
Though equity issuance improved throughout 2003, IER voters went back to March to choose the best equity issue of 2003. France Télécom's Eu15bn rights issue is seen by many in the market as one of the key ECM events of 2003 and was, despite a number of large rights issues during the year, the biggest rights issue not just of 2003, but in the long history of the market.

In February France Télécom received shareholder approval for a rights issue of up to Eu30bn. The company indicated it would not need to raise more than Eu15bn and said the issue could come after the release of its results in March, possibly in September with the release of its half year results or even in March 2004.

However, the announcement of the issue in late March shocked the equity market. Most bankers had assumed the company would wait for its share price to rise more before launching the deal. What surprised bankers most though was that the company launched the issue only a week after the Iraq war began. It was generally assumed that the conflict would make even small equity issues difficult, let alone a Eu15bn rights issue from a recently distressed corporate.

France Télécom asked 24 banks to bid for the underwriting at a price range of Eu13-Eu16. However, some banks did not agree with the Commerzbank-devised structure.

Credit Suisse First Boston and UBS were two noteable absentees from the syndicate, which was otherwise a role call of all the top names in European finance. UBS was known to disagree with the shallow discount on the rights and for this reason opted out of the issue, though it was an adviser to the French treasury.

The issue was priced at Eu14.50, an extremely tight 28% discount to the previous close. France Télécom was concerned a deep discount of 40%-50% would have sent the message to the market that it was a rescue issue, undermining the improvement in the company's finances in the previous six months.

The French government took Eu9bn of the issue, but the remaining Eu6bn was underwritten and sold by a syndicate of 21 banks, reminiscent of early 1990s equity deals.

Shareholders subscribed to 94% of the issue, the remaining 75m shares were sold at Eu19.

Impressively the company's share price remained stable throughout the subscription period and rump placement. After the completion of the issue France Télécom shares were just 3% below the closing price of March 23, the day before the issue was launched.

  • 30 Jan 2004

All International Bonds

Rank Lead Manager Amount $m No of issues Share %
  • Last updated
  • Today
1 Citi 329,208.56 1277 8.09%
2 JPMorgan 321,584.64 1392 7.90%
3 Bank of America Merrill Lynch 296,878.25 1014 7.29%
4 Barclays 249,463.73 926 6.13%
5 Goldman Sachs 218,838.41 733 5.38%

Bookrunners of All Syndicated Loans EMEA

Rank Lead Manager Amount $m No of issues Share %
  • Last updated
  • Today
1 BNP Paribas 46,136.68 182 7.00%
2 JPMorgan 44,545.29 93 6.76%
3 UniCredit 35,639.50 153 5.41%
4 Credit Agricole CIB 33,211.72 160 5.04%
5 SG Corporate & Investment Banking 32,419.80 126 4.92%

Bookrunners of all EMEA ECM Issuance

Rank Lead Manager Amount $m No of issues Share %
  • Last updated
  • Today
1 JPMorgan 13,755.50 61 8.94%
2 Goldman Sachs 13,469.15 66 8.76%
3 Citi 9,716.40 55 6.32%
4 Morgan Stanley 8,471.86 53 5.51%
5 UBS 8,248.12 34 5.36%