The Hindu : Business : Reliance Infocomm raises $300 million

Online edition of India's National Newspaper
Thursday, Oct 14, 2004

Business

Business

Reliance Infocomm raises $300 million

By Our Special Correspondent

CHENNAI, OCT. 13. For the first time ever, mobile service provider Reliance Infocomm has raised $300 million through an offshore syndicated term-loan facility.

The seven-year loan is contracted at 1.7 per cent above LIBOR (London Inter-Bank Offered Rate).

Jagannatha Kumar, Head of Project Finance at Reliance Infocomm, told this correspondent over phone that the principal repayment would commence after five years. Interest payment could be bi-annual.

Mr. Kumar said the loan was structured in such a way that the interest rate could drop to LIBOR plus 1.2 per cent as the life cycle of the loan shortened.

This was the first time that the company was going in for an overseas debt, he said.He reckoned the de-risking that had taken place in the industry over the past few years due to assorted factors, including policy ones, had injected a sense of confidence in the overseas lenders to fund the project of this kind in India, in general, and magnitude of Reliance, in particular. The debt would largely go to fund the capital expenditure of the company, which was gearing to improve the network, expand the coverage and beef up the bandwidth capacity, among others. The loan was arranged by ABN Amro NV, Australia and New Zealand Banking Group, Bank of Baroda, BNP Paribas, DBS Bank, ICICI Bank, Mashreqbank and Rabobank.

To a question, Mr. Kumar indicated that the debt funds could be fully deployed in the next few months towards its capital expenditure programmes. To a query, he said Reliance Infocomm had a domestic debt of around Rs. 5,000 crores. The debt-equity ratio was `comfortable' at the moment, he said. It is also claimed to be the largest debt raising exercise by an Indian telecom company in the global syndication market.

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