S&P downgrades Nokia after Siemens agreement

S&P downgrades Nokia after Siemens agreement

Credit rating agency Standard & Poor’s has cut Nokia’s debt rating one step deeper into junk after the mobile manufacturer agreed to buy the Siemens stake in Nokia Siemens.

HumanIPO reported last week Nokia had confirmed plans to acquire Siemens’ 50 per cent stake for EUR1.7 billion (US$2.2 billion), partly funded by a secured loan.

Standard & Poor’s said Nokia’s net cash may fall as a result of the deal, lowering the company’s rating to B+ from BB-, four levels below investment grade.

“The ratings reflect our revised assessment of Nokia’s financial risk profile assessment to ‘aggressive’ from ‘significant,’” the agency said. “We continue to assess its business risk profile as ‘weak.’”

In a statement, Nokia’s executive vice president and chief financial officer (CFO) Timo Ihamuotila said: “With a strong positive gross and net cash position, Nokia was able to take advantage of an opportunity to fully own Nokia Siemens Networks and, we believe, create meaningful value for Nokia shareholders. We will continue to prudently manage our cash resources post-transaction.”

Ihamuotila said the company’s financial position remained strong, and that Nokia has access to additional liquidity via a revolving credit facility.

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