RCom draws down 2nd tranche of $400-mn loan from Chinese banks
12 May 2011
Reliance Communications Ltd (RCOM) today said that it has drawn down the second tranche of Rs1,780 crore ($400 million) towards refinancing of 3G spectrum fees out of the Rs8,700 crore ($1.93 billion) facility signed with China Development Bank (CDB) in March.
The facility includes Rs6,000 crore for refinancing 3G spectrum fee payment by RCOM and Rs2,700 crore for equipment imports from Chinese vendors.
The first tranche of Rs3,000 crore was drawn down in March (See: Reliance Communications draws down $665 million of China Development Bank loan). With this, RCOM has already drawn Rs.4,780 crore towards refinancing of 3G spectrum fees and the last tranche is expected to be drawn shortly.
The amount will be used to refinance RCOM's short term rupee borrowings resulting in substantial savings in its interest cost apart from extending its debt maturity profile.
The projected annual savings in interest costs works out to Rs500 crore. The loan facility, which is fully underwritten by CDB, and is being funded by a syndicate of Chinese banks and financial institutions including CDB, has an extended maturity of 10 years.
This represents the first and largest ever syndicated loan for refinancing spectrum fees by any telecom company.
RCOM is the flagship company of the Reliance Group, which currently has a net worth in excess of Rs64,000 crore, cash flows of Rs13,000 crore and net profit of Rs 8,400 crore. India's second-largest mobile firm, it has a subscriber base of 138 million.
On Monday, the company redeemed $500 million worth of zero-coupon foreign currency convertible bonds issued in May 2006 at a premium of 25.84 per cent.