Mumbai, Maharashtra India (PressExposure) June 04, 2011 -- Anil Ambani Group firm Reliance Communications today said it has received various offers from several interested parties for acquiring a stake in its subsidiary, Reliance Infratel Ltd, which will help the company bring down its huge debt burden.
Reliance Infratel Ltd is a subsidiary of Reliance Communications and is engaged in the business of building and operating communications towers, optical fibre cables and other related assets at designated sites.
As of March 31, 2010, RCom held a 89.71 per cent stake in Reliance Infratel. "The board of directors of RCom was informed of the receipt of formal indicative offers from several interested parties for the acquisition of RCom's controlling interest in Reliance Infratel," RCom said in a disclosure to the Bombay Stock Exchange.
The company further added that based on the indicative offers, completion of such a transaction would facilitate the company's stated objective of achieving a substantial reduction in its overall debt position.
"The board has approved taking the process to the next stage of detailed due diligence with a view to complete such a potential transaction at the earliest," the release added. Investors are advised that this is only a preliminary disclosure and any such potential transaction is subject to appropriate due diligence, negotiations, documentation and approvals, the release added.
As of March 31, RCom's net debt was Rs. 32,048.5 crore. During FY'11, the company had signed final documentation with China Development Bank (CDB) for a Rs. 6,000 crore ($1.33 billion) loan facility.This represents the first and largest ever syndicated loan for refinancing spectrum fees. RCom had also signed an additional agreement for Rs. 2,700 crore ($600 million) with CDB, for financing imports/domestic expenditure for telecom equipment from Chinese vendors (namely, Huawei and ZTE).
The aggregate financing of Rs. 8,700 crore ($1.93 billion) has a maturity period of 10 years, contributing to significant extension of RCom's debt maturity profile, apart from substantial savings in interest costs. Other strategic initiatives are underway to de-leverage the balance sheet, which shall be shared at a later date, the company had said.