France Telecom's share price
A massive, well-flagged, marketed rights issue for a
heavily indebted European telco during a war is by no means a
sure-fire deal. So France Telecom's success in selling an
astonishing e16 billion-worth is remarkable.
The credit arguably belongs more to France Telecom
than to any of the 21 underwriting banks. In a first for the
equity capital markets, the issuer created a bidding process
for the underwriting. At about 8pm on Friday, April 21,
France Telecom asked 24 banks to indicate how much they would
be willing to underwrite at a price of between e13 and e16,
effectively building its own book.
Advised on the bidding process by Commerzbank, France Telecom
structured the fees to encourage banks to bid aggressively. Bidders
allocated more than e1 billion received 2.5%, banks that bid more
than e1...
