RCOM ties up funds for FCCB redemption, stock jumps 5%

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RCOM ties up funds for FCCB redemption, stock jumps 5%

Reliance Communications (RCOM) has tied up with China Development Bank (CDB) and EXIM Bank for a loan to redeem its upcoming FCCBs (foreign currency convertible bonds) worth Rs 6125 crore.

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Moneycontrol Bureau

Reliance Communications (RCOM) has tied up with China Development Bank (CDB) and EXIM Bank for a loan to redeem its upcoming FCCBs (foreign currency convertible bonds) worth Rs 6125 crore.
 
FCCBs are a special category of bonds and are issued in currencies different from the issuing company's domestic currency. Corporates issue FCCB's to raise money in foreign currencies. These bonds retain all features of a convertible bond making them very attractive to both--- investors and issuers.

Meanwhile, RCOM in statement says it will benefit from extended loan maturity of seven years and attractive interest cost of 5%.

The loan proceeds would be used for refinancing the entire redemption amount of FCCB which are due for redemption in March this year, said the company. Post this announcement, shares of the company jumped 5% to Rs 90.35 at 9:40 hours.

Meanwhile, the conversion price is around Rs 654/a share say analysts. The announcement comes at a time when the depreciation rupee, decreasing call charges were putting pressure on the company's financial performance. The company with a market cap of Rs 14,000 crore has had a dismal performance in the past eight quarters. Also, the company has a debt of around Rs 25,000 crore on its books.

The Anil Ambani led-company had issued these bonds in 2007, when the stock price were trading in the levels of Rs 410 and had a market cap of  above Rs 80,000  crore.

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