Idea Cellular Ltd has achieved financial closure of over Rs 2,225 crore (Rs 22.25 billion) for its telecom venture with a project cost of around Rs 5,000 crore (Rs 50 billion) from IDBI Ltd and Rabo India Finance Pvt Ltd, which is slated as the single largest syndication in the Indian telecom sector.
The financial closure would help the company consolidate its position in the Indian cellular industry and allowing it to expand operations, Idea Cellular chief executive officer Vikram Mehmi said in a release in Mumbai on Thursday.
The deal encompasses simultaneous closure on non-recourse basis of seven facilities, covering five telecom circles and involving around 60 parties, Mehmi said.
The long-term facility consists of Rs 1,850 crore (Rs 18.50 billion) for Maharashtra, Gujarat, Andhra Pradesh, Madhya Pradesh and Chattisgarh circles, and Rs 375 crore (Rs 3.75 billion) for Delhi circle, he said.
The entire loan is on a limited recourse basis with a tenure of nine years and would be utilised towards meeting the capital expenditure and refinancing debts of higher costs or shorter tenures, he said.
While the financing for the existing circles has been syndicated by IDBI as the lead manager, that for Delhi circle has been arranged by Rabo India Finance, he said, adding the financing was done on a 1:2 ratio.
Idea Cellular has also received comprehensive guarantee of Rs 170 crore (Rs 1.70 billion) from Nordic Investment Bank, which would be utilised for credit enhancing of its non-convertible debentures, he said.
The preference shares of around Rs 500 crore (Rs 5 billion) have already been syndicated by Standard Chartered Bank, Mehmi said, adding the dollar lenders who had committed to provide funds to Birla AT&T Communications Ltd and Tata Cellular Ltd, continues to support the re-christened Idea Cellular.
Idea Cellular is a joint venture between TCL, BACL, which subsequently acquired BTA Cellcom Ltd and had bid for fourth cellular license in Delhi circle.
As part of the current financial closure, the dollar denominated facilities of BACL and TCL would be paid as per the original schedule with the last installment due for payment in June-September 2005, he said.
The rupee facilities would be refinanced through the new rupee facility, with extended maturity and lower interest cost, he said, adding the current financial closure also involves a security merger as common security would be extended to BACL and TCL debt facilities.
The company would also refinance the earlier facility of Rs 510 crore (Rs 5.10 billion) of debt financing towards acquiring RPG Cellcom, meeting acquisition financing, replacing existing debt of RPG Cellcom and meeting capital expenditure, he said.
This would also be refinanced through long-term rupee facility with lower interest and extended maturity, he said.
Idea's project cost for Delhi circle is estimated to be around Rs 750 crore (Rs 7.50 billion), which is proposed to be funded in a debt-equity ratio of 1:1, he said, adding, the security for Delhi circle would be ring-fenced from other circles.
