| Ericsson: management is breathing more easily after shareholders backed its rights issue |
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Management at Ericsson is breathing a big sigh of relief after existing shareholders stumped up to support its long-delayed SKr30 billion ($3 billion) rights issue last month. Uncertainty about its business prospects, 3G write-offs and doubts about its capacity to raise new equity capital had damaged its credit ratings and its share price in preceding months. For now the company's survival is assured, but where can it go from here?
The Swedish mobile network infrastructure supplier initially announced that it would complete a rights issue in April this year. In addition to a lengthy timetable required for rights issues by Swedish law, approval also had to be gained by the SEC as Ericsson has 15% of its share register trading in the US. This itself took two months, as the SEC had not reviewed Ericsson since 1995.