KPN shuns rights issue

June 25, 2001 Posted: 1018 GMT

LONDON (CNN) -- Shares in Dutch telecoms operator KPN jumped on Monday after it scotched stock market speculation it was planning a rights issue.

The company was reported last week to be looking to sell up to 5.5 billion ($4.7 million) of shares to help ease its debt burden.

"Whilst debt reduction remains a priority," the company said. "There is no present intention to raise new equity finance via a rights issue."

KPN is currently hampered with debts of 23 billion due to investment in third-generation, or high speed, mobile licences. Its shares slumped last week amid fears a rights issue would dilute the value of existing shares.

Investors cheered KPN's announcement that no more new shares were coming onto the market by sending the stock up more than 6 percent in Amsterdam to 6.33.

But the leading telecoms operator in the Netherlands added it was focusing on a possible link-up with another company, repeating earlier comments it was holding merger and cooperation talks.

The KPN statement comes after John Goossens, the head of Belgium's former telecom monopoly Belgamcom, said on Sunday KPN was one potential European operator that it may seek to join up with.

He told Belgium's RTBF TV news programme: "KPN is healthy if you set aside the debt. It has good earnings and revenues."

Analysts believe the decision not to issue new stock to existing shareholders was an indication KPN feels investors would shun such an offering.

British Telecom, itself burdened with huge debts, last week raised nearly £6 billion in Britain's largest rights issue.

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