Indian mobile operator Reliance Communications, part of Reliance ADA Group, has signed a US$1.93bn syndicated loan with China Development Bank (CDB) to refinance part of its debt.
The facility, which will reportedly have a maturity of ten years and will…
Indian mobile operator Reliance Communications, part of Reliance ADA Group, has signed a US$1.93bn syndicated loan with China Development Bank (CDB) to refinance part of its debt.
The facility, which will reportedly have a maturity of ten years and will carry an interest of 5%, will mainly be used to refinance debts incurred to acquire 3G spectrum earlier this year.
The remaining US$600m will be used to buy Chinese telecoms equipment from Huawei and ZTE, wrote media reports. The two Chinese companies have also given a supplier’s credit line of three years to RCOM to fund the equipment acquisition, reported the Business Standard.
The Indian company decided to turn to a Chinese bank because it offered a very attractive interest rate compared to Indian banks. Utility company Reliance Power, also part of Reliance ADA Group, recently ordered equipment in a deal mainly financed by Chinese banks, according to reports.
RCOM is a highly leveraged company and has been seeking to cut its US$7bn net debt for quite some time now. The company said in November that it was still considering selling a stake in its tower business, Reliance Infratel, in order to raise cash. However, at the time it emphasised that it was generating enough cash for its capital expenditure.
