Telecom has sweetened its offer to a group of its stockholders in a push to secure approval for its demerger from network branch, Chorus.
Holders of Telebond stock were earlier this month offered a one-off payment of 0.25% for approving the demerger in a vote to be taken next week.
Now, Telecom has doubled that figure to 0.5%.
The company is also addressing concerns it may fall foul of credit rating agencies Moody’s and Standard & Poor’s under its new structure. If its credit ratings fall to Baa1 and BBB+, the interest rate applicable to stock increases by 0.5%. A further 0.5% is added if they fall to Baa2 and BBB or lower.
50% of the bondholders need to participate in the vote, and 75% of those need to vote in favour.
According to Nick Olson, chief financial officer for Telecom: "Following discussions with major stockholders, in return for their support of this proposal, we have agreed to increase the consent fee and provide an increase in the interest rate paid on the existing stock in the event that both Standard & Poor’s and Moody’s decrease the credit rating of Telecom below the ‘A’ band.
"While Telecom intents to adopt a capital structure consistent with maintaining an ‘A’ band credit rating post-demerger, the potential coupon increase component of the proposal adds an additional level of comfort for stockholders.”
The vote will take place on September 30.
