Telecom raises $2b warchest for AAPT

By Geoff Senescall

Telecom is understood to be raising $2 billion in anticipation of a possible takeover battle for the Australian telecommunications company AAPT.

Local and overseas banks have been contacted to participate in what will be one of the biggest debt facilities put in place in New Zealand.

Banking sources say that Telecom has given them a short time frame to participate. This is because Telecom wants to have the funding lines in place if it is to counter a bid by Australian firm Cable & Wireless Optus for AAPT.

Telecom's decision to set up the debt facility was endorsed at yesterday's board meeting. But while Telecom's action confirms it is serious about AAPT, the board is understood to have decided that it will not make the first move. Ideally, it would prefer not to have to go to 100 per cent.

Telecom became embroiled in the takeover wrangle early last week when it took the local market by surprise by revealing it had paid 570Ac a share ($A168.7 million or $202 million) for a 10 per cent holding in AAPT - a move which was welcomed by the Australian company.

This effectively trumped a $A1.5 billion, or 500Ac a share, hostile takeover offer by Optus, which had already accumulated a 10 per cent stake.

Upping the ante on AAPT has stalled Optus, which has yet to release its Part A takeover documents. This is despite getting clearance to do so last Thursday from the New South Wales Supreme Court, which rejected AAPT's application for an injunction preventing the takeover documents from being sent to shareholders.

On Friday, Optus said it would not release its takeover documents before May 31. It said the delay would allow the anti-monopolies authority, the Australian Competition and Consumer Commission, to reconsider its preliminary view that the offer had anti-competitive elements.

Since Telecom and Optus have bought shares, a valuation - commissioned by AAPT and done by Grant Samuel & Associates in Australia - has put a price on AAPT of between 604Ac and 701Ac a share. This values AAPT at between around $A1.8 billion and $A2.1 billion.

Telecom closed up 8c at 830c.