Alcatel-Lucent seeks to raise $2 billion for recovery drive By Leila Abboud PARIS (Reuters) - Loss-making telecom equipment maker Alcatel-Lucent plans to raise 955 million euros ($1.3 billion) from shareholders and $750 million from a high-yield bond to cut debt and drive what its boss has called a last-ditch effort to save the group. Chief Executive Michel Combes launched his "Shift" plan in June, including 10,000 job cuts, 1 billion euros of cost savings and 1 billion of asset sales. He is aiming to revive a firm which has struggled against low-cost Asian competitors as well as larger rivals Ericsson and Nokia since its creation in 2006. The Franco-American company said on Monday it planned to sell new shares at 2.10 euros apiece, a hefty discount to the current share price. At 1315 GMT, Alcatel-Lucent shares were down 2.6 percent at 2.89 euros, after falling as much as 9.3 percent. Shares often fall after the announcement of a new share issue, which can dilute earnings per share for existing investors. Analysts and traders said the fundraisings, which were accompanied by plans for a 500 million euro syndicated revolving credit facility, were not a surprise, but came earlier than expected, probably due to a recent surge in the firm's shares. "After the sharp rise in the shares last week, the fall this morning is relatively small," said Franklin Pichard, a director at Barclays Bourse, which advises investors and owns Alcatel-Lucent shares. "That means that Alcatel is no longer feared by investors," he said, adding he planned to take part in the capital increase. Combes, who has pledged to slash Alcatel-Lucent's debt and had earlier flagged that a capital increase might be needed, said the fundraisings were a key part of his turnaround plan. "In the past few months, we have gotten renewed confidence from customers and the market, and this allowed us to proceed immediately with these three financial operations today," he said on a conference call. They will help the company manage its own destiny and restore competitiveness. The strengthening of Alcatel-Lucent's finances will also give it more options at a time when speculation has been mounting that consolidation lies ahead among telecom equipment makers. In September, Reuters reported that Nokia was discussing internally whether to approach Alcatel-Lucent about a tie-up or buying its wireless unit, funded by proceeds it will get from the sale of its handset business to Microsoft. Combes' strategy is to streamline Alcatel-Lucent to focus on IP networking products, which help telecom operators carry mobile data traffic, and high-speed mobile and fixed broadband. The new shares will be offered to current holders of Alcatel-Lucent stock, who will be given one right for every share they own as of November 18. A shareholder needs 41 rights to be able to buy 8 of the newly issued shares. Between 454,722,512 and 460,000,000 shares will be issued, with the subscription period running from November 19 to November 29. Holders of shares in the United States will not be eligible for the share issue, the company said a statement. The 955 million euros of expected proceeds from the share sale compare with Alcatel-Lucent's current market capitalization of about 7 billion euros. The company likely chose to carry out a capital increase now because the shares have been surging on hopes for its latest turnaround plan - up almost 200 percent this year, compared with a 21 percent rise in the European tech index The group also reported third-quarter results last Thursday that sent the shares up nearly 20 percent. Since June, Combes has reprofiled Alcatel's debt maturities significantly, reducing the amount due by the end of 2016 to 876 million euros from 2.03 billion. Once the share sale and bond are carried out, the company intends to repay 2014 and 2015 debt issuances, Chief Financial Officer Jean Raby said on Monday. After the moves, the group's net debt will be roughly between "break even" and 50 million euros, he added. As of September 30, the group's net debt was 1 billion euros. The capital increase is underwritten by banks including Merrill Lynch, Crédit Agricole, and Deutsche Bank as global coordinators. Citigroup, J.P. Morgan Securities, Goldman Sachs, HSBC Bank, Morgan Stanley and Natixis are also joint bookrunners. Additional reporting by Alexandre Boksenbaum-Granier; Editing by Geert De Clercq and Mark Potter