Mannesmann deal hit by Orange
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Mannesmann deal hit by Orange


Issuer: Mannesmann Amount: €2.3 billion Type of issue: convertible Launched: October 6 Global co-ordinators: Deutsche Bank, Merrill Lynch

Last month's €2.3 billion issue of convertible bonds for Mannesmann promised to mark a revival of the convertible market, but within a week of its (successful) launch it was hit by Mannesmann's bid for Orange of the UK. At its launch on October 6, the deal was significantly oversubscribed, though it had been done on terms which raised plenty of eyebrows. The yield to maturity was 3.875%, towards the bottom of the indicated range and the premium conversion - the share price at which the bond could be exchanged for equity - was one of the highest seen this year at 38% above the prevailing share price. A high conversion premium usually points to a bullish equity market, but this deal came as the equity markets were looking rocky.

"Before the transaction was announced there were some concerns that the market was glutted," says Farley Bolwell managing director of equity-linked products at Merrill Lynch, one of the two global coordinators - the other was Deutsche Bank.

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