Reliance Infocomm on Saturday announced signing of a $750 million (about Rs 3,400 crore) loan agreement with a consortium led by US Export and Import bank.
Reliance Infocomm signed a deal with US Exim Bank, Export Development Canada, and Citigroup for financing facilities of $750 million for telecom projects in India. "This marks the closure of RIC's total debt financing of $2.2 billion (about Rs 10,000 crore)."
The Reliance 'ownership issue'
The financing deal, signed on Friday night, comprises $500 million of Exim Bank-guaranteed loans and the remaining is from Export Development Canada with total repayment period of 10 years after providing for one and a half years for completion of the network in 5,000 cities, a company statement said.
Citigroup, a financial service provider, is the arranger of the loan.
The deal comes just ahead of the meeting of the Reliance Industries' board on Monday, where equity pattern and investment in Infocomm is likely to be discussed in view of a demand made by the flagship company's vice-chairman and managing director Anil Ambani.
Reliance Incomm sources said that the exposure was not on the balance sheet of RIL and the finances were arranged on its own balance sheet.
Reliance Infocomm ended the year 2003-04 with a turnover of over Rs 2,700 crore (Rs 27 billion) and net loss of Rs 390 crore (Rs 3.9 billion).
While the statement did not give details of the rate at which the funding was being arranged, Jagannatha Kumar, the head of project financing of Infocomm, said, "This deal provides the company extremely attractive long tenor funding."
Kumar said the deal demonstrates US and Canadian supplier support to the company and the strong relationship RIC has built with export credit agencies like US Exim Bank and EDC.
"The deal is an endorsement of our business plan and a recognition by international agencies of the company's achievements," he said.
Sanjay Nayyar, the country head, Citigroup India, said, "This represents a landmark transaction in India's fast growing telecom network in terms of both size and structure. It provided financial flexibilities to Reliance Infocomm by adding a new dimension to their debt financing alternatives."
With this, RIC has tied up a total debt of $2.2 billion (close to Rs 10,000 crore) comprising international debt of 1.05 billion dollar from Export Credit Agencies and various offshore credit banks and balance from domestic banks (about Rs 5000 crore) to meet the debt requirements of RIC's project.
"The entire debt, including the facilities from ECAs, is structured entirely on the basis of RIC's operating and financial strengths and its business potential. The amount of $1.05 billion of international debt raised by RIC in a short span of less than six months is the largest in Indian corporate history," the statement said.
While the US Exim Banks's $500 million facility is in the nature of a guarantee and based on this guarantee, a Citigroup special purpose vehicle, GOVCO, will be lending to RIC; in case of EDC, the $250 million is a direct loan to the company, it said.