Electrolux Sets 9.1 Billion SEK Rights Issue Price for Restructuring
Electrolux Announces Rights Issue to Support Restructuring Efforts
Subscription Price and Purpose of the Rights Issue
May 21 (Reuters) - Electrolux set a subscription price for its previously announced 9.1 billion Swedish crowns ($975.96 million) rights issue at 16.75 crowns per share, the company said on Thursday, in a bid to support its restructuring measures.
Challenges Facing Electrolux
Weak Demand and Competitive Pressures
The appliance maker, which has struggled in the face of weak demand and cut-price competition, has been restructuring and focusing on more premium categories to try and lift profitability.
Recent Financial Performance
Last month, the Swedish company announced a first-quarter hit to results due to weak U.S. demand, a rights issue and a North American tie-up with Chinese rival Midea .
The firm blamed a slump in U.S. demand as well as higher U.S. tariff costs as it swung to an operating loss of 266 million Swedish crowns ($29 million) in January-March from a year-earlier 452 million profit.
Market Reaction and Impact
Share Price and Job Cuts
The announcement plunged shares by 24% to their lowest in 17 years. The company said that the measures would result in about 3000 job cuts.
Details of the Rights Issue
Underwriters and Use of Proceeds
Morgan Stanley, SEB and Deutsche Bank will be underwriters for the issue, Electrolux said. The rights issue would be used to fund the Midea partnership and other restructuring measures, it added.
Currency Exchange Rate
($1 = 9.3242 Swedish crowns)
Reporting Credits
(Reporting by Kanjyik Ghosh in Barcelona;Editing by Nick Zieminski)
