RCom's Global Cloud Xchange raises $350 mn from global markets

Global Cloud Xchange (GCX), a subsidiary of India's fourth-largest mobile telecom operator Reliance Communications (RCom), has raised $350 million (Rs2,100 crore) from the international markets through issuance of bonds.

GCX, formerly Reliance Globalcom, will use the proceeds to pare some of its debt totalling Rs36,000 crore.

The notes were priced at 100 per cent with a coupon and yield of 7 per cent. The bonds are due to mature in 2019, RCom said in a statement.

The Anil Ambani group company will use about $250 million from the proceeds to refinance a loan facility availed from Standard Chartered Bank. The loan was taken by Reliance Globalcom B.V.

The remaining proceeds will be used for capital expenditure and general corporate purposes.

The bond issue received an overwhelming response from the market, and was significantly oversubscribed.

About 22 per cent of the issue was allotted to the US, 29 per cent to Europe and 49 per cent to Asia. By investor type, the issue saw 78 per cent go to fund managers, 13 per cent to hedge funds, 6 per cent to private banks and 3 per cent to other investors.

The notes are expected to settle on August 1 2014. Deutsche Bank and Standard Chartered Bank were the global co-ordinators to the issue.

GCX, incorporated in 1994, owns five submarine cable systems totalling 69,000 route km.

RCom was also in talks with Hong Kong's Citic Telecom to sell a stake in the subsea cable operator.

As of 30 March RCom had a debt of about Rs40,000 crore but pared it to Rs34,000 crore as of date. In June, the Mumbai-headquartered company raised Rs4,300 crore through stake stale to institutions and promoters.

RCom, which straddles both CDMA and GSM services, raised raise Rs3,000 crore through a Qualified Institutional Placement (QIP) and the remaining Rs1,300 crore through a preferential allotment of warrants to promoter groups at Rs 150 each.

In June, the company also announced launching a new sub-sea cable system connecting Mumbai to Singapore. GCX, together with its partners, will invest a total of $200 million in the cable system.

The new cable is part of the company's strategy to provide a direct sub-sea route to bridge an important gap in the emerging markets corridor, specifically delivering a direct Mumbai-Singapore route to bypass current outage prone terrestrial routes between Mumbai and Chennai.