Tulip Tele up 18% in 4 sessions; can it refinance FCCBs?

Moneycontrol Bureau

Trading in shares of Tulip Telecom has been frozen at the upper end of the 5% intra-day circuit filter at Rs 42.40, as the market is betting that the company will manage to refinance its USD 140 million Foreign Currency Convertible Bonds (FCCBs) by the end of this month. With this, the stock has gained 18% since the beginning of this week. Tulip Telecom Chairman and Managing Director H S Bedi had told PTI on Monday that the FCCBs would be repaid by the end of this month.. Tulip Telecom shares had crashed from Rs 86 to Rs 35 between September 7- October 12 this year, after the company was unable to repay its FCCB holders on maturity. Brokerage house Nomura feels the refinancing of the FCCBs will not be a good enough reason to re-rate the stock which has fallen 66% over the last 6 months. "Even post (refinancing FCCBs), we believe Tulip may still have to look for other means to de-lever given its high gearing. Net-debt-to-last-4-quarters EBITDA was 4.2 times which has risen from roughly 2 times at the end of March 2011. At the same time, the company continues to have relatively high capex/working capital needs to drive growth, in our view. We therefore remain on the sidelines until we get more clarity on above issues," says the Nomura note.