Reliance Jio looks to refinance $1.5 billion overseas debt

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Mumbai: Reliance Jio Infocomm Ltd, the telecom arm of billionaire Mukesh Ambani’s Reliance Industries Ltd, is looking to refinance as much as $1.5 billion of debt from overseas lenders, according to two people directly aware of the company’s plans.

“There are two bank facilities of $1 billion and $500 million each with tenors of 5.5 and 7 years, respectively,” said one of the two people cited above, requesting anonymity. “The company is in the midst of investor road shows which are being held in Tokyo, Taiwan and Singapore currently.”

This is part of the overall refinancing of $2.5 billion of Reliance Industries Ltd’s (RIL) older bank facilities, the second person said, also requesting anonymity. “The original loan of $1.5 billion was parts of debt raised to buy broadband spectrum. The debt was to mature in 2015 but was rolled over,” the person said.

Both facilities, guaranteed by RIL, were underwritten by a consortium of 15 foreign banks. While the pricing of the loans this time was not immediately known, RIL has previously raised loans at around 160 basis points above Libor (London interbank offered rate), an international benchmark rate. One basis point is one-hundredth of a percentage point.

In 2010, Reliance Industries had bought Infotel Broadband Services for $1 billion, marking its re-entry of into the telecom business. Infotel Broadband Services was then the only firm to win broadband spectrum in all 22 zones in India paying Rs12,848 crore ($2.7 billion) for the spectrum, Mint had reported. Confirming the development to Mint, a RIL spokesperson said “Reliance Jio Infocomm is in the midst of successfully refinancing $1.5 billion of syndicated commercial loans taken from a group of international lenders at a cost lower than the existing loans whilst also achieving extension of maturities of the said original loans.

“The loan is currently under syndication and the said process is expected to be closed in the next four weeks. In addition, a $1 billion loan in RIL is also being refinanced under similar timelines. The said exercise is part of the ongoing liability management exercise which the group regularly undertakes,” the RIL spokesperson said in response to a query. In August, Bloomberg reported that RIL plans to refinance a significant portion of its close to $12 billion of borrowings which will mature over the next three years and may sell bonds to repay the debt. RIL’s repayment obligations from 2018 through 2020 will be its biggest for any previous three-year period and will include about $8.14 billion of term loans, $3.52 billion of bonds and a $300 million revolving line of credit, the report added.

During FY17, RIL had infused Rs33,660 crore into Reliance Jio in the form of optionally convertible preference shares. RIL presently holds 99.44% equity stake in Reliance Jio which started commercial operations in September last year and provides pan-India telecom 4G network in key domains. For the July-September quarter, Reliance Jio reported a loss of Rs270.59 crore against revenue of Rs6,147 crore and Ebitda of Rs1,443 crore. The company said that its number of subscribers grew to 138.6 million by the end of September.

Significantly, at RIL’s annual general meeting in 2014, chairman Mukesh Ambani had said that Reliance Jio will spend Rs70,000 crore to roll out 4G services which would raise RIL’s overall debt 33 times. Ambani had then said that RIL expects Reliance Jio to be debt-free by 2017-18,

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