BackR-Com plans to raise `4,300 crore from investors and promoters
Firm will raise `3,000 cr using QIP (which opened on 24 June) and the rest via warrants allotted to promoter group
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Mumbai: Anil Ambani-controlled Reliance Communications Ltd (R-Com) will raise ₹ 4,300 crore by selling shares to financial institutions and a preferential allotment of warrants to its promoter group to cut debt.
R-Com will raise ₹ 3,000 crore using qualified institutional placement (QIP) and the remaining via an allotment of “warrants to be converted into or exchangeable into equal number of equity shares to the promoter group", the company told the stock exchanges.
The QIP opened for subscription on 24 June.
The firm has fixed ₹ 149.61 a share as the floor price for the QIP and the offer price at ₹ 142.13, which is a 5% discount to the floor price, as per guidelines issued by Securities and Exchange Board of India (Sebi).
Shares of R-Com gained 0.97% to close at ₹ 151.35 per share on Tuesday on BSE, while the exchange’s benchmark Sensex gained 1.35% to 25,368.90 points.
R-Com has hired Edelweiss Financial Services Ltd and JP Morgan Chase and Co. to manage the share sale, said a person close to the development.
Meanwhile, the board of the company approved a proposal to allot 86.7 million warrants that will be converted to the same number of shares for approximately ₹ 1,300 crore to the promoter group entities.
“The promoter or promoter group entities will be required to make payment of 50% of the subscription amount on the date of allotment of the warrants, and the balance 50% will be payable on or before 31 March 2015 and the promoter or promoter group entities will endeavour to accelerate the said balance payment even before that date," the firm said.
The preferential allotment has been made at ₹ 150 per share.
“The proceeds of the QIP offering and the preferential allotment will be used primarily for repayment of debt and deleveraging the balance sheet of the company," a statement from R-Com said.
As of 31 March, R-Com had a debt of ₹ 35,713 crore, down from ₹ 42,274 crore a year ago.
“Given the overall sentiment for telecom sector in India, it will be challenging to sell an issue of this size. However, the promoters infusing funds into the business is likely to prop up the appetite for R-Com’s QIP, as it is an indication that Reliance Group remains committed to the business," said Sandeep Upadhyay, senior vice-president (infrastructure solutions group), Centrum Capital Ltd.
Upadhyay also said that the discount for QIP is not very steep for the investors, as the stock has not risen sharply in the last one year.
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