Qualcomm investors frustrated by move to appease activists

New York

TWO months after lending US$10 billion to Qualcomm Inc, bondholders are getting a lesson in the risks of buying the debt of companies with activist shareholders.

The creditors found out last week that the chipmaker - after posting its worst sales decline since 2009 - is again considering splitting in two as part of a strategic review spurred by hedge fund Jana Partners LLC. Just two months earlier as it was marketing the bonds, the company told potential lenders that keeping the businesses together was the better strategy. Now the market value of the debt has dropped 4.3 per cent and the bondholders are upset.

"Everybody knows this is a risk over three, four, five years - no reasonable person should've expected it was a risk in two months," said Scott Kimball, a fixed-income manager at Bank of Montreal's Taplin Canida & Habacht unit, which owns the bo…