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Idea ties up largest syndicated borrowing

Mumbai, Oct. 30: A Rs 2,225-crore financial closure arranged by IDBI and Rabo India Finance for Idea Cellular today became the single-largest loan syndication deal wrapped up in the Indian telecom industry. The project cost of this venture is around Rs 5,000 crore.

The money will help the company consolidate its position in the cellular industry, giving it the resources to expand operations, Idea Cellular chief executive officer Vikram Mehmi said in a release here today.

Of the total sum tied up, Rs 1,850 crore will be invested in Maharashtra, Gujarat, Andhra Pradesh, Madhya Pradesh and Chattisgarh circles, besides Rs 375 crore in Delhi.

Idea will use the limited-recourse nine-year loan to meet capital expenditure and refinance high-cost short-term debts.

IDBI, the lead manager, has rustled up the part of the loan that will be spent on existing circles, while Rabo India Finance has mopped up the portion for Delhi. The financing has been carried out in a ratio of 1:2.

Idea has also received a comprehensive guarantee of Rs 170 crore from Nordic Investment Bank, which will be utilised to service its non-convertible debentures, which have been rated AAA (FSO), he said.

Preference shares of around Rs 500 crore have already been syndicated by Standard Chartered Bank. Dollar lenders who committed to funds to Birla AT&T Communications Limited (BACL) and Tata Cellular Limited continue to support the re-christened Idea Cellular.

Idea cellular is a joint venture between Tata Cellular and BACL, which subsequently acquired BTA Cellcom and had bid for fourth cellular licence in the Delhi circle.

Under the financial closure, the dollar denominated loans of BACL and Tata Cellular would be paid on schedule, with the last instalment in June-September 2005, Mehmi said.

The rupee facilities would be refinanced through new loans, with extended maturity and lower interest. The current financial closure also entails a security merger and a common security would be extended to BACL and Tata Cellular’s debt facilities. The company will also use a loan of Rs 510 crore to acquire RPG Cellcom, replace existing debt of the firm it will buy and meet capital expenditure. This will also be refinanced through long-term rupee borrowings raised at cheaper rates and for a longer period, the Idea chief said.

The company’s project cost for Delhi is estimated at Rs 750 crore. This amount will be funded in a debt-equity ratio of 1:1. The security will be “ring-fenced” from other circles.

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