Orange S.A. Issues €750 Million of Hybrid Notes
Orange S.A. (the Company) has successfully priced the issuance of €750 million in undated deeply subordinated fixed-to-reset rate notes. This issuance, known as the New Notes, carries a fixed coupon rate of 3.875% until the first reset date, scheduled for March 24, 2032.
Details of the Hybrid Notes
The New Notes are set to be admitted to trading on Euronext Paris, and the rating agencies are expected to assign the new issuance a solid rating of BBB-/Baa3/BBB- from S&P, Moody's, and Fitch respectively. Additionally, the notes will feature an equity content of 50%, enhancing their attractiveness to investors.
Accompanying Tender Offer
In conjunction with the issuance of the New Notes, the Company has initiated a tender offer aimed at repurchasing its existing hybrid securities. This tender offer, referred to as the Tender Offer, targets:
- The €1.25 billion Undated 12-Year Non-Call Deeply Subordinated Fixed to Reset Rate Notes, which has a first reset date set for October 1, 2026. There remains €1.1 billion currently outstanding from this series.
- The €500 million Undated 7.5-Year Non-Call Deeply Subordinated Fixed to Reset Rate Notes with a first reset date of March 19, 2027; this series has a total outstanding of €500 million.
The total acceptance amount for the Tender Offer will not exceed €750 million. This strategic move aims to proactively manage the Company's hybrid portfolio and allow qualifying holders to sell their existing notes ahead of their respective reset dates. Furthermore, it allows them to apply for priority in the allocation of the New Notes.
About Orange S.A.
Orange is renowned as one of the foremost telecommunications operators globally, boasting revenues of approximately €40.3 billion. With around 125,800 employees worldwide, including about 69,700 in France, Orange is well-positioned in the market. As of March 31, 2025, the Group reported a customer base of 294 million, comprised of 256 million mobile customers and 22 million fixed broadband customers. Recent changes, such as the deconsolidation of certain activities in Spain following the formation of MASORANGE, reflect Orange's adaptability in the market.
Furthermore, Orange excels as a leading provider of global IT and telecommunications services to multinational corporations through its Orange Business brand. In February 2023, the Group unveiled its strategic initiative named "Lead the Future," focusing on a sustainable business model characterized by responsibility and efficiency. This strategic roadmap aims to enhance network excellence and fortify Orange's position as a leader in service quality. Orange is prominently traded on Euronext Paris under the stock symbol ORA.
Conclusion
The issuance of these hybrid notes and the concurrent tender offer signify Orange's commitment to strengthening its financial footing while preparing for future investments and opportunities. The Company's focus remains on adjusting its portfolio efficiently and expanding its operations as it aims to adapt to the ever-evolving telecommunications market.
Frequently Asked Questions
What are hybrid notes?
Hybrid notes are debt securities that possess characteristics of both equity and debt, allowing companies to raise capital without immediately impacting their credit ratings.
Why is Orange S.A. issuing hybrid notes now?
Orange is issuing these notes to strengthen its financial position and manage its existing hybrid security portfolio actively.
What benefits do hybrid notes provide to investors?
Investors can benefit from potentially higher yields compared to traditional debt securities, as well as equity-like characteristics.
How does the tender offer work?
The tender offer allows existing noteholders to sell their notes back to Orange, potentially at a premium, prior to their reset dates.
Who can participate in the tender offer?
Qualifying holders of the existing notes can participate in the tender offer, provided their jurisdiction allows such transactions.
