Vodafone hit as Hutchison cashes in

The shares in the mobile operator hit 227p on the news that the Hong Kong conglomerate was to raise $2.5bn through a three-year convertible bond issue based on slightly less than half of its 2.3 per cent holding in Vodafone.

At the opening of trading the share price recovered slightly, reaching 229p by mid-morning. However, by noon (GMT) it had fallen further to a new two year low of 221.5p. At 14:30(GMT) it had was at 224p.

The new bond issue is convertible at 310p per share. This is a significant discount to the bond issue made by Hutchison last September which converts at 359p but which carries significantly more interest for the buyers.

City analysts say that the move lets Hutchison raise cash without selling its shares in the current discounted market for telecoms equities.

Vodafone announced its first move in to the Latin American market with the $937m purchase of a 34.5 per cent stake in Mexico's second-largest mobile operator, lusacell.