Reliance Communications raises $1.18 billion from Chinese banks to redeem FCCBs
17 January 2012
Reliance Communications Ltd (R-Com), the country's second-largest mobile phone operator by subscribers, has tied up loans for a total of $1.18 billion from state-run Chinese banks to refinance its outstanding foreign currency convertible bonds (FCCBs).
Industrial and Commercial Bank of China, China Development Bank Corp, Export Import Bank of China and other banks together provided the refinancing facility, Anil Ambani-led Reliance Communications said in a filing with the Bombay Stock Exchange (BSE).
The FCCBs are due for redemption on 1 March 2012.
Reliance Communications has amassed a huge debt of $6.5 billion and has been struggling to repay that amidst rising competition that has dragged down earnings of mobile phone operators in the country.
Reliance Communications also saw its profits declining for nine straight quarters. The refinancing at a lower rate of 5 per cent per annum, would help ease the pressure on the company.
"R-Com will benefit from extended loan maturity of seven years and attractive interest cost of about 5 per cent," the company said in its filing.
The company, which has been struggling with the planned sale of its tower business, has also been hurt by a worsening of global financial markets. A deal to combine its telecom tower business with GTL Infrastructure collapsed in 2010.