By Michael Shields
ZURICH (Reuters) - Sunrise Communications Group (S:SRCG) bowed to investor pressure on Tuesday and scrapped a rights issue needed to complete its 6.3 billion Swiss franc ($6.39 billion) acquisition of Liberty Global's (O:LBTYA) UPC business.
It cancelled an extraordinary shareholder meeting planned for Wednesday to approve the 2.8 billion franc cash call and avoid an embarrassing loss on the measure.
"The board of directors of Sunrise has concluded that the clear majority of shareholders who have registered their shares to vote at the EGM do not support the capital increase," it said, citing shareholder indications and opposition from its biggest shareholder, Germany's Freenet (DE:FNTGn).
Freenet and other investors had opposed the rights issue even in its scaled-down form.
"We regret cancelling the EGM. We have spent a significant amount of time engaging with our shareholders and continue to believe in the compelling strategic and financial rationale of the acquisition," Sunrise Chairman Peter Kurer said.
It said it cancelled the EGM with Liberty Global's consent.
"The share purchase agreement remains in force and effect unless terminated by a party and has a long stop date of 27 February 2020."
Some Sunrise investors said the 6.3 billion franc price tag for cable operator UPC was too expensive and raised concerns that Liberty Global was not taking part in the deal.
Liberty Global, set up by U.S. cable pioneer John Malone, this month offered to buy up to 500 million Swiss francs in new Sunrise shares as a way of easing through the capital hike needed to clinch the sale.
"The existing share purchase agreement between the parties will remain in place with some minor amendments, including the flexibility to convene a new EGM and certain adjusted termination rights," Liberty Global said on Tuesday.
"In addition, the commitments by Liberty Global in the recently announced conditional rights purchase agreement will lapse and thereby terminate," it added in a separate release, referring to the offer to buy new Sunrise stock.
($1=0.9863 Swiss francs)