Essar telecom holding company raises Rs4,280 crore through NCDs
23 October 2009
ETHL Communications Holdings Ltd (ECHL), a unit of India's diversified business conglomerate Essar Group, and the holding company for telecommunication services said yesterday that it has raised Rs4,280 crore ($920 million) through private placement of listed, zero-coupon Non-Convertible Debentures (NCDs) to fund its overseas expansion plans.
The NCD issue was launched earlier this month as two separate series A and B, amounting up to Rs2,250 crore each through book-building process, aggregating Rs4,500 crore, including the provision for oversubscription.
According to the Group's press release, the issue which was rated AAA(ind) (so) by Fitch Ratings, received an overwhelming response from over twenty investors across mutual funds, insurance companies and corporate houses and the book was oversubscribed more than 3 times.
The two series of zero-coupon bonds issued, with an aggregate size of Rs2,140 crore each will mature in July 2011 and December 2011, and are backed by put option with Vodafone Group for the entire Essar Group's 33 per cent stake in Vodafone-Essar, India's third-largest cellular phone operator. ECHL–the new firm created for the fundraising–currently holds 10.97 per cent stake in the telecom major.
UK's Vodafone Group valued Essar Group's 33 per cent stake in the earlier Hutchison-Essar at $5.46 billion, when it took over Hutchison Telecom International's 67 per cent stake in 2007 for $10.9 billion.
The NCDs were priced well inside the upper end of the book-build pricing band of 8.50-9.50 per cent per annum for series A and 8.75-9.75 per cent for series B. Series A is priced at 9.15 per cent per annum and series B at 9.25 per cent.