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TomTom plans €430 million cash call

TomTom, the Dutch maker of satellite navigation devices and software, is to raise €430 million ($600 million) by offering new shares and through a private placement, which Harold Goddijn, its chief executive, said should put concerns over its debt “off the table”, according to today’s FT.

The company paid €2.9 billion to buy digital map maker Tele Atlas at the end of 2007 and has since struggled under the debt burden.

The group is to raise €359 million through a rights issue in which all four founders of TomTom, who include Mr Goddijn, will take up their rights in full and contribute €169 million.

A further €71 million is to be raised through a private placement of shares to Janivo Holding, one of the founding investors in Tele Atlas, and Cyrte Investments, a technology investor owned by Delta Lloyd, the Dutch insurer.

The new investors will leave the four founders with 47.2% of the company rather than 51.5% previously, the FT article stated.

Mr Goddijn told the Financial Times the net proceeds would be used to bring the company’s net debt down to €700 million.

The group has succeeded in renegotiating its debt covenants, under which net debt would be allowed to rise to 3.5 times earnings before interest, tax, depreciation and amortisation by the end of the year.

“We’ve looked carefully at this and think it’s in the best interests of the company to strengthen the balance sheet and allow us to continue to develop the company,” Goddijn said.

TomTom’s share price has fallen nearly 66% in the past year on concern over its debt, but the stock surged last week after the group announced it would start selling a navigation application for Apple’s iPhone this summer.

The Dutch group makes most of its revenues from so-called personal navigation devices (PND) – the satnavs that stick to car windscreens – but is returning to its roots in offering software for increasingly powerful mobile phones.

While TomTom’s will not be the only iPhone navigation software, a preview shown at an Apple event last week unveiling new iPhone software won favourable coverage. Mr Goddijn described mobile phone software as “important” to the group alongside its core PND business.