The Dutch government announced today it has sold into the share market a 12 per cent stake in telecom company KPN for about €2 billion.
The announcement came days after the government unveiled a 2004 budget with drastic spending cuts.
"The government is doing this simply because they need the money. They've raised around €2 billion in one go and that is positive," said a Dutch share trader.
KPN's shares opened flat and moved higher after the news. By 4 a.m. EDT the stock was 0.6 per cent stronger at 6.79 euros.
The Dutch finance ministry said the state had sold the 300 million shares in the former national telecoms monopoly through a block sale to Citigroup Global Markets, reducing the government's holding to 19.3. per cent .
Dealers in London said that Citigroup was placing the KPN shares with investors at between €6.75 and €6.80, which could raise up to €2.04 billion. KPN shares closed at €6.75 on yesterday.
The finance ministry said the proceeds of the sale would go into a state fund for infrastructure spending on projects like roads and the government could cut its KPN stake further.
But it has agreed with Citigroup not to sell any more shares for a year unless there are "certain exceptions."