Reliance Com seeks to buy back FCCBs

Reliance Communications Ltd, India's second biggest mobile operator, said on Wednesday it would launch a tender offer to buyback foreign currency convertible bonds at a discount, subject to Reserve Bank approval.

The company said in a statement that $950 million of zero coupon FCCBs were outstanding from $1 billion issue set to mature in 2012. It said it had already repurchased $40 million of the bonds.

Reliance Communications said it would decide the extent of the repurchase programme and the tender offer would be funded via its internal accruals and foreign exchange proceeds. It said the buyback of FCCBs should result in gains to the extent of the discount and would help reduce its debt.

The Mumbai-based company applied for RBI permission to purchase more than $50 million of the notes, it said in a filing to the Singapore stock exchange on Wednesday.

Investors wishing to tender their Reliance bonds must apply to agent J P Morgan Chase & Co before 11:59 pm in Singapore on 17 April, the filing said, without indicating how much Reliance is willing to pay.

Reliance said in a separate announcement to the Singapore stock exchange today that it bought back $5 million of foreign currency convertible bonds at a discount, without giving more information.

"The amount of bonds repurchased will be determined by the company at its discretion," the said company in a note to the Bombay Stock Exchange. The company has issued tender offer to all its bond holders for buying back the bonds for cash at a discount.