RBNL may use funds to cut debt, expand broadcast business

Reliance Broadcast Network (RBNL) is in talks with PE investors to raise USD 87 million. Chief financial officer (CFO) of the company, Asheesh Chatterjee said that they have planned to raise some money via preferential allotment of shares. The main reason for this fund raising is to reduce debt and expand its radio and television business, he added.

The company told CNBC-TV18 that it might conclude the talks by end of December. Chatterjee indicated that the Reliance Broadcast's founders, who own a little less than two-thirds of the company, will maintain their stake by infusing capital into the company at the time of the preferential allotment.

Below is the edited transcript of his interview. Also watch the accompanying video.

Q: Could your take us through the private equity investment of around Rs 400 crore that you have been planning to raise? Are you already in active talks with private equity investors? If so, by when could this close in?

A: This should close around March-April by the end of this fiscal. We are largely looking at growth capital for our radio business as the phase III auctions would come up pretty soon and to expand our TV broadcast business. We are in talks with a few private equity investors and hope to close within the next six to nine months.

Q: Are these multiple private equity investors? Could you throw some colour in terms of their quality and names at this point in time? Are they India based or from overseas?

A: It is a mixed bag of foreign as well as domestic investors. They are more on the foreign side. They might have been looking at RBNL as a stock, which is at the inflexion point. Some bit of growth capital can yield massive returns here.

From a capital base perspective, we are about a Rs 450 crore capital size company. There is a need to expand the capital base as we move from a radio business to a media conglomerate. The investors like our idea and promoters have not been diluting their stake. This is a fairly serious comfort from the promoters to investors.

Q: What will be the dilution if you raise this Rs 400 crore?

A: None. Promoters are not diluting. It is an expansion of the equity base.

Q: You indicated that you are looking to reduce your debt and use a part of that fund for your expansion. Could you break-up this Rs 400 crore? How much would your use to reduce your debt and how much would be for the expansion?

A: Our debt at the moment is Rs 120 crore and we will retire part of it. It largely depends on the timing of our radio phase III. Whatever money is surplus beyond the radio phase III auction will be use to retire debt.