RBI gives nod to RCom to refinance $1.12bn FCCBs

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RBI gives nod to RCom to refinance $1.12bn FCCBs

The Anil Ambani-led Reliance Communications, which is sitting on a debt pile of nearly Rs 37,000 crore, today said it has received the Reserve Bank nod for refinancing USD 1.18-billion of its FCCBs (foreign currency convertible bonds) by a clutch of Chinese lenders.

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The Anil Ambani-led Reliance Communications , which is sitting on a debt pile of nearly Rs 37,000 crore, today said it has received the Reserve Bank nod for refinancing USD 1.18-billion of its FCCBs (foreign currency convertible bonds) by a clutch of Chinese lenders.

The company has a foreign debt of Rs 29,336 crore as of the December quarter.

Earlier this fiscal, RCom and RPower together tied up about USD 3 billion worth loans from China. Reliance Power is said to have saved about Rs 6,500 crore in interest costs when it tied up USD 1.1 billion (over Rs 5,000 crore) of Chinese loans, which was used to repay costlier domestic loans.

As per RBI data, FCCBs worth about USD 3.5 billion are maturing in the current fiscal 2011-12, while FCCBs worth about USD 4 billion would mature in 2012-13.

The refinancing is being provided by Industrial and Commercial Bank of China (ICBC), China Development Bank (CDB) and Export Import Bank of China, RCom said in a statement.     

RCom, which had earlier announced that the Chinese lenders had agreed to refinance its debt obligations before March 1 deadline, said it will benefit from the extended loan maturity of seven years and interest cost of 5%.     

"This is the largest refinancing in the history of FCCBs by any domestic corporate," the company claimed.

The ADAG company had a debt of Rs 36,763 crore at the end of the December quarter -- up from Rs 31,904 crore year ago -- in its books, and has been trying various options to manage the issue, including amalgamations.     

Out of this as much as Rs 29,336 crore are foreign debt, according to a filing by the company to the exchanges.

With increased competition and very low tariff base, RCom reported a whopping 61.25% fall in its third quarter profit to Rs 186 crore, against Rs 480 crore in the year-ago period, on an income of Rs 5,052 crore, which was almost flat.

Also, the company's average revenue per user (Arpu) for wireless services slipped to Rs 100 during the quarter, despite a high revenue per minute (RPM) of 45 paise.