* Reliance Comm looking to ease $7 bln debt load
* Several attempts at asset sales have fallen short
* Company says awaits better conditions for deal
(Adds details, quotes, background)
By Devidutta Tripathy and Sumeet Chatterjee
July 20 India's Reliance Communications
has shelved a planned Singapore initial public
offering by its undersea cable unit to raise up to $1 billion,
wi t h unfavourable market conditions dealing a blow to its
efforts to ease a heavy debt load.
The company will "await supportive market conditions and
easing of prevailing global uncertainties to proceed with the
offering/listing at an appropriate time in the future," Reliance
Communications said in a statement late on Friday.
Burdened with net debt of $7 billion as of March 31, the
company controlled by billionaire Anil Ambani was looking to
raise between $700 million and $1 billion from the listing of
its undersea cable assets through a business trust in Singapore.
"It is hugely negative for the company. It would be very
tricky for them to raise money now and reduce the debt," said
Juergen Maiar, an Austria-based fund manager with Raiffeisen
Euroasien Aktien that owns Indian shares worth $200 million but
sold its Reliance Communications holdings a few years ago.
The Singapore trust, called GTI Trust, was offering a
dividend yield of as much as 11.5 percent, higher than that
offered by peers, but that didn't attract enough investor
interest. The institutional bookbuilding period for the IPO was
extended twice this week.
"You can give them some benefit of the fact that the demand
for equities globally is extremely weak," said Eric Mookherjee,
a Paris-based fund manager for Shanti India, which owns about
$300 million of Indian shares an d previously held convertible
debt in Reliance Communications.
"But the fact that they still went ahead with it shows how
badly they need cash," he said.
A source with direct knowledge of the matter who declined to
be identified said the order book had not been fully covered by
the end of Friday despite commitments from Singapore state
investor Temasek, state-owned China Investment Corp
and Middle Eastern funds.
The stalled IPO is the latest in a string of unsuccessful
attempts at asset sales by India's No.2 mobile phone carrier by
It has been trying to raise about $3 billion by selling its
telecoms tower assets but has not struck a deal. In 2008 and
2009 it had tried to spin off the tower business in an IPO.
Reliance Communications secured $1.2 billion in loans from
Chinese state banks early this year to repay overseas
convertible debt due in March.
"Maybe they would get some Chinese money again, but
otherwise it is going to be difficult for them to raise money,"
Meanwhile, fierce competition in India, the world's
second-biggest mobile phone market, has hurt Reliance
Communications, which reported an unexpected increase in profits
for the three months to March, after 10 straight quarters of
Ahead of the announcement, Reliance Communications shares
closed 0.3 percent lower in Mumbai trading at 63.75 rupees,
valuing the company at about $2.4 billion. The stock price is
now less than a tenth of its peak in 2008.
Deutsche Bank, Standard Chartered,
Singapore's DBS and Industrial and Commercial Bank of
China were the advisors for the public offering.
(Additional reporting by Saeed Azhar in SINGAPORE; Editing by
Tony Munroe and Mark Potter)