Spice Communications, a company that offers GSM services in Punjab and Karnataka through its Spice Telecom brand, intends to raise Rs 520 crore (Rs 5.20 billion) through its initial public offering (IPO).
The price band for the issue, which opens on June 25 and closes on June 27, has been fixed between Rs 42 and Rs 46 a share.
Malaysia's incumbent service provider Telekom Malaysia (TM) holds 49 per cent, while industrialist and Modi group Chairman B K Modi owns the remaining 51 per cent stake in Spice Communications.
"We will raise a total of Rs 632 crore (Rs 6.32 billion), which includes the Rs 112 crore (Rs 1.12 billion) raised through pre-IPO placement, from the capital markets. We will use the proceeds of the IPO to repay debt and for general corporate purposes," Spice Telecom Chairman and Managing Director Dilip Modi told reporters here today.
The company had earlier raised Rs 112 crore through a pre-IPO placement of 2.48 crore (Rs 24.8 million) shares at Rs 45 each.
The GSM operator will issue 11.31 crore (Rs 113.1 million) equity shares of Rs 10 each and the issue will comprise 16.39 per cent Spice Communications' fully diluted post-issue share capital. The company is taking a 100 per cent book-building route for the IPO.
Enam Financial Consultants and UBS Securities India are book-running lead managers, while Karvy Computershare is the registrar to the issue.
Spice Communications will use around 50 per cent of the total proceeds to retire part of its Rs 1,000 crore (Rs 10 billion) debt, while the remaining would be used for expansion plans.
The company's expansion plans included foraying into national long distance (NLD) and international long distance (ILD) services in the country, Modi said.
After the IPO, TM's stake in the company will fall to 39 per cent and the promoter's holding to 41 per cent, while retail public holding will increase to around 20 per cent.
The company's shares would be listed on the BSE. Spice Communications could not list its shares on the NSE due to regulatory concerns, Modi said.
Since June 2002, the company has been operating with a negative networth. At the end of 2006, it had an accumulated loss of Rs 684.35 crore (Rs 6.843 billion) with a negative networth of Rs 160.52 crore (Rs 1.605 billion). As a result, it will not be able to list on the National Stock Exchange (NSE), where listing of companies with negative net worth is not permitted.
Bankers to the issue said Spice Telecom could look at listing on the NSE after the IPO, as it expects to recover from its ailing position. At present, Spice Communications is the eighth largest GSM operator in the country, with 3 million subscribers and a 2.30 per cent market share.
