& Wireless confirmedthat its plan to split the group into
the UK-based enterprise Cable & Wireless Worldwide
plc and the Caribbean
telecom provider Cable & Wireless Communications is set to take effect on 26 March.
The split, which is still subject
to shareholder approval in February, aims to cut costs and increase the value
of the two companies as standalone businesses.
Chairman Richard Lapthorne said on Tuesday: “Both businesses have clear
and distinct strategies and we believe demerger will create further value for
The split will be financed with a £230
million convertible bond and £300 million in credit facilities for the C&W
Worldwide business and US$500 million in medium-term facilities and a US$500
million bond offer, announced yesterday, for the C&W Communications unit.
The company said it would pay a total
final dividend of 9.50 pence for the aggregate 2009-2010 period and split its
final dividend payment into 3.34 pence for Cable & Wireless Communications
and 3 pence for Cable & Wireless Worldwide.
Prior to the demerger the company
will inject a smaller than expected amount of £30 million into its
underperforming defined benefit pension scheme, which will be also be split
between the two new companies.
C&W confirmed its guidance for
the current fiscal year, stating that earnings before interest, tax,
depreciation and amortisation at Communications is forecast to be betweenUS$880
and US$900 million, whereas EBITDA for the Worldwide unit is expected to be
“Turning to the performance of our
businesses, they have both made good progress in the third quarter and I’m
pleased to reconfirm our EBITDA guidance for 2009/10,” Mr. Lapthorne said.
“Trading continues to be
challenging within the Caribbean. Whilst we are holding market share, lower
usage by customers and more aggressive price promotions means that revenue and
EBITDA continue to trend in line with the first half of 2009/10.
“We believe that the
market conditions within the Caribbean region will remain difficult through the
remainder of this year and into next,” C&W said in a statement.