ZURICH (Reuters) -Liberty Global said on Friday it aimed to spin off its Swiss telecom unit Sunrise to shareholders later this year following its $7.4 billion takeover of the business in 2020.
The listing on the SIX Swiss exchange is planned for the second half of 2024, with two classes of shares, Liberty Global (NASDAQ:LBTYA) said in a statement.
Sunrise will be listed with a long-dated, low-cost capital structure supported by 1.5 billion Swiss francs ($1.7 billion) of debt reduction, it added.
The targeted debt reduction is expected to be accomplished through Sunrise's expected free cash flow generation, debt optimization and Liberty Global corporate liquidity, including non-core asset disposals at Liberty Global, the company said.
Sunrise, which competes with market leader Swisscom in Switzerland is expected to have stable revenue and stable to low single digit adjusted earnings growth in 2024, Liberty Global said. Sunrise is expected to generate free cash flow of 360-400 million francs this year.
Liberty Global has appointed J.P. Morgan and UBS as financial advisors on the operation, which is expected to be tax free for U.S. shareholders of Liberty Global, with evaluation of tax treatment in other jurisdictions ongoing.
Liberty is backing a listing with a strong capital structure which alongside future cash generation potential "will underpin Sunrise's attractive equity story and scope for dividends," Liberty Global CEO Mike Fries said in a statement.
Sunrise will host a capital markets day in due course to provide more information on Sunrise and the spin-off.