Ams-OSRAM
AMS,
lost more than a quarter of its market value on Thursday after the heavily-indebted electronics groups set out plans to raise more than €2 billion ($2.1 billion) as it strives to bolster its balance sheet.
The Austria-based sensor manufacturer said it was looking to receive €800 million through a capital increase, about €800 million by selling bonds, some €300 million from selling and leasing back certain assets, and a further €350 million with unsecured notes, bilateral debt facilities, and other instruments.
Ams-OSRAM has been having difficulty amid increased competition for its components in the automotive sector and as declining sales of smartphones reduced demand for its products, leaving it struggling with net debt that stood at €2.03 billion by the end of June.
News of Ams-OSRAM’s plans did not go down well with investors, with its Swiss-traded shares plunging more than 28% at one point. “The magnitude of the rights issue is a negative surprise as €800m is equivalent to c.50% of the current market cap. We had expected a smaller equity portion,” wrote Juergen Wagner, analyst at Stifel, in a note to clients.
The mood across European bourses was more mixed on Thursday, however, as Germany’s DAX
DX:DAX
was flat and the CAC 40
FR:PX1
in France gained 0.3% as luxury and energy groups had a better day. The U.K.’s FTSE 100
UK:UKX
fell 0.3% as strength in miners was counteracted by further falls for interest rate-sensitive sectors like real estate.
Shares of Hennes & Mauritz
HM.B,
fell nearly 4% after the Swedish fashion retailer was downgraded from buy to hold by a research team at deutsche Bank.
“H&M delivered another small earnings beat in 3Q [published Wednesday] but the mix between sales, gross margin and cost management is less compelling than we would have liked. This creates a big debate in our mind,” said Deutsche.
“At this stage we can’t get the confidence in a strong macro outlook and believe the self-help at H&M is much more correctly assumed by consensus and the share price,” Deutsche added as it took its price target down from 195 Swedish krona to 175.
Shares in Diageo
DGE,
held near their lowest since April 2021, after the maker of Johnnie Walker and Guinness affirmed its full-year guidance while warning of building cost pressures and signs of economic headwinds.
“The stock has underperformed year to date, held back by concerns about the U.S. business, while trading in Europe and APAC [Asia/Pacific] has remained strong,” said Andrea Pistacchi, analyst at Bank of America. “Today’s trading update provides some reassurance. Evidence of growth acceleration in H2 should support a re-rating,” he added, while reiterating the shares a buy with a target of 3,600p.
In forex, the euro
EURUSD,
and pound
GBPUSD,
rebounded about 0.5% apiece after technical indicators suggested on Wednesday they had reached sharply oversold conditions versus the dollar.
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