Reliance Communications and partner to raise $15 billion for Hutch buyout
21 December 2006Mumbai: Reliance Communications Ltd and Blackstone Group LP have sought $125 billion in loans to fund the buy-out of Hutchison Essar, India's fourth-largest mobile phone company, a group of three banks led by Citigroup Inc and UBS AG said.
Other banks, including ABN Amro Holding NV, Barclays Plc, Deutsche Bank AG, are also submitting proposals to Reliance Communications to fund the offer for Hutchison Essar, sources said. The Anil Ambani-owned Reliance Communications has not yet formally hired any banks, they added.
The leveraged buyout loan will allow Reliance Communications and Blackstone to borrow most of the $15 billion offer price, the bankers said.
The acquisition would give Reliance Communication access to 50 million customers and allow Hutchison Essar's parent to sell off more telecommunication assets.
Hutchison Essar is 67 per cent owned by Hong Kong-based Hutchison Telecommunications International Ltd., a unit of Hutchison Whampoa. Hutchison Whampoa and Hutchison Telecommunications declined to comment on the developments.
Reliance Communications, the country's second-biggest mobile company, is teaming up with buyout fund Blackstone for the acquisition, which will help it to expand in the world's fastest-growing mobile phone market.
Reliance Communications has a total of 3.18 million subscribers using the global system for mobile communications, or GSM network. It also has about 24 million users on its code division-multiple access, or CDMA, network.