In early March, Hutchison 3G UK Holdings sought 1bn pounds ($1.57bn) from its three parents after delays in launching its 3G mobile phone service meant it failed to meet its required financial targets set by the banks which had lent it more than 1bn pounds ($1.57bn). Hutchison 3G wanted to extend loan payments by one year to 2005. However, the banks asked it to increase its capital, and Hutchison 3G was forced to ask its parents for the necessary funding.
Hong Kong-based Hutchison Whampoa Ltd, which owns 65% of Hutchison 3G UK, agreed to provide the bulk of the funding, lending the UK operator approximately 650m pounds ($1.02bn). The other two shareholders, NTT DoCoMo and Netherlands incumbent KPN NV, were more cautious. Despite the fact they faced a legal obligation to provide the money, they delayed committing the cash, stating they had received requests for loan advancements, but would only make a decision in April.
Yesterday’s announcement that NTT DoCoMo, which holds a 20% stake in Hutchison 3G, will provide a 200m pound ($315.6m) loan advancement after a careful consideration of the necessity of a funding request from Hutchison 3G UK has placed added pressure on the remaining shareholder, KPN NV, which is facing its own financial constraints.
KPN has been busy selling off non-core operations to reduce its debt level, which currently stands at $12.4bn euros ($13.57bn). It has recently paid back a 1.6bn euro ($1.79bn) loan from US carrier BellSouth Corp.
Speaking to ComputerWire, a KPN spokesman confirmed that negotiations are still proceeding and that an announcement will follow.
Source: Computerwire
