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Liberty Global to invest up to CHF500M in Sunrise's rights issuance

Liberty Global PLC agreed to invest up to CHF500 million in Sunrise Communications Group AG's upcoming rights issuance, which will be used to finance the UPC Schweiz acquisition.

Under the rights purchase agreement, Liberty Global, which owns UPC Schweiz, will invest in a combination of the Swiss operator's tradable subscription rights and subsequent subscription of newly issued shares. According to Liberty Global's estimates, its Sunrise shareholding would reach about 7.8%, based on current market prices, if it fully utilizes the rights and shares purchase.

Liberty Global will be given rights to nominate a representative for election to Sunrise's board of directors at the next annual general meeting if it exceeds a 5% shareholding. The U.K.-headquartered company requested for a commitment from Sunrise to nominate a Liberty Global representative for election to the board at the next annual general meeting in April 2020.

Sunrise said that it believes Liberty Global's investment will lessen the financial commitment needed from Sunrise shareholders. The statement comes after reports that a number of Sunrise shareholders are planning to oppose the planned UPC Schweiz transaction and the rights issuance needed to finance the deal.

Liberty Global CEO Mike Fries said the company believes "in the logic of this combination" which he thinks will create "a national powerhouse."

The operator requested its shareholders to vote in favor of the rights issue at the extraordinary general meeting on Oct. 23. All holders of Sunrise's common stock as of the close of business on Oct. 17 will be entitled to vote.

Proxy advisers Glass Lewis, Ethos and zRating supported the proposed ordinary capital increase and the UPC Schweiz acquisition, according to Sunrise.