Essar Communications to raise $3.95-bn syndicated loan

Essar Communications, Ruias-promoted telecom company and partner of UK giant Vodafone in India, is planning to raise $3.95 billion of syndicated loan.The loan proceeds would help Essar monetise its liquidity rights agreed with Vodafone as part of the British company's acquisition of Indian mobile operator Hutchison Essar, now known as Vodafone Essar, earlier this year.The funds would also be used for partly refinancing the existing debt and to fund further investment and expansion plans of the group.

Vodafone had acquired a controlling stake in Hutch Essar earlier this year for $10.9 billion from Hong Kong- based Hutchison Telecom International Ltd (HTIL).

The loan was launched by arrangers BNP Paribas, Citigroup, Commerzbank and Standard Chartered on Monday, a statement said here. The fully-underwritten deal would mature in December 2011 and pays a margin of 90 basis points over LIBOR.

Essar to borrow $5 bn from overseas mkt

Essar group is in talks with international bankers to raise about five billion dollars (over Rs 20,000 crore) by leveraging its 33 per cent stake in Hutch-Essar, the country's fourth-largest mobile player in which UK's Vodafone recently acquired majority stake.

The borrowing would be made by Essar Global, the overseas arm of Essar Group, and the funds would be used for financing the recent acquisitions of steel plants in Trinidad and Tobago, Canada, USA and building power plants.

Essar Group, through its domestic companies and global subsidiary, may require about 8 billion dollar (over Rs 32,000 crore) to fund the acquisitions and expansion into power sector, sources in the know of the development said.

Read more in The DNA Money article.

Vodafone to drop Hutch name by end ’07

The Hutch logo will make way for the Vodafone symbol by the end of this year in India, according to Vodafone CEO Arun Sarin. Besides brand transition, the group also wants to introduce low-cost handsets in its newly-acquired Indian subsidiary, Sarin said after announcing Vodafone’s annual financial results on Tuesday. The handsets are being procured from Chinese equipment firm ZTE.

Vodafone plans to spend over £1 billion (over Rs 8,000 crore) towards capital expenditure in the financial year 2007-08 in the Indian market, and hopes to cover more than 50% of India’s population by then.

However, when it comes to offering the more evolved ‘total communication’ package, top Vodafone officials believe that the Indian market would be served differently as its needs are different. The main objective is to put a handset in every Indian hand.

Vodafone to transfer Bharti stake by Nov '08

Vodafone, which acquired controlling stake in mobile firm Hutch-Essar, today said it will transfer its 5.6% stake in Bharti Airtel back to the Indian mobile leader by November next year.

Following acquisition of control in Hutch-Essar for $10.9 billion in cash, Vodafone had entered into a share sale agreement with Bharti regarding its 5.6% equity holding in the company.

"The shareholding will be transferred in two tranches, the first before March 31, 2008 and the second by November 2008," Vodafone said in a statement after announcing its annual results for the year ended March 31.Vodafone completed the purchase of the Hutch-Essar stake from Hong-Kong based Hutchison Telecom International (HTIL) on May 8.

Read more in The Business Standard article.

Vodafone pays $10.9 bn to complete Hutch-Essar deal

British telecom giant Vodafone has paid a discounted price of $10.9 billion (Rs 46,870 crore) in cash for Indian mobile firm Hutch-Essar to complete a deal that gives it access to one of the fastest growing mobile markets to counter saturation in European markets.

The final price represents a reduction of $180 million from the originally agreed price of $11.08 billion, which reflects retention and closing adjustments as agreed with seller Hutchison Telecom.

The stage is now set for Vodafone to start its operations in India, which is witnessing an addition of five million new mobile subscribers every month. Hutch-Essar will become Vodafone-Essar over a period of time.
The estimated pre-tax gain from the sale is expected to be approximately $9 billion to HTIL.

The adjustments also include $352 million retention by Vodafone toward cost and expenses associated with the transactions.
The net cash inflow to HTIL before payment of the settlement amount is about $ 10.83 billion.HTIL is expected to declare a special dividend of 6.75 HK dollars per share following the completion of the necessary formalities.

Earlier, the deal was cleared by India’s Foreign Investment Promotion Board, which looked into allegations of breach of Foreign Direct Investment norms in the company.
India allows a maximum FDI of 74% in the telecom sector.
Vodafone acquired 52% direct stake of HTIL in Hutch-Essar, while Indian partner Essar holds 33% and three minority shareholders the remaining 15%.

Read more in The Live Mint article.

Deal clinched: Vodafone gets all-clear call from FM

Vodafone cleared its last hurdle in acquiring a controlling stake in Hutch Essar with finance minister P Chidambaram giving his go-ahead on Friday. His approval comes within a week of the Foreign Investment Promotion Board giving its nod for the acquisition.

The FM’s approval should pave the way for Vodafone to secure management control of HEL and for the company to be renamed Vodafone Essar. Sources said as a first step, Vodafone will now be able to constitute a new 12-member board to oversee the operations of the company. Essar vice-chairman Ravi Ruia will be the chairman of Vodafone Essar and Vodafone chairman Arun Sarin will be the vice-chairman. Max India chairman Analjit Singh and HEL MD Asim Ghosh will also be on the board.

The approval comes as a welcome reprieve to Mr Singh and Mr Ghosh, whose 12.26% shareholding in HEL has been under scrutiny since the deal was announced in February.
The Vodafone-HEL regulatory saga, which saw the proposal being deferred thrice by FIPB, began in February soon after Vodafone announced it had agreed to acquire companies that controlled 67% in HEL from Hutchison Telecom for $11.1 billion. This had given rise to a controversy about whether the 15% held by Mr Singh, Mr Ghosh and IDFC should be counted as FDI.

Read more in The Economic times article.

India breaks into top 10 M&A league

India became the world’s eighth largest market in the first quarter of 2007 — an improvement over the 11th rank in calendar year 2006. According to Alan S Alpert, managing partner (M&A transaction services), Deloitte Tax LLP, there has been a substantial increase in M&A in India. Inbound M&A (into India) and local M&A have been growing.

The Vodafone Hutch accounted for the majority of the gains in the first quarter. Also the number of M&A transactions by Indian companies overseas has gone up substantially. The US and the UK continues to be the number one and two M&A market. According to Thomson Financial, in the first quarter India saw inbound and local deals of $25.581 billion.

In the first quarter India pipped markets like France (2006: $76.8 billion, 2007: $24.79 billion), Italy (2006: $17.40 billion, 2007: $14.79 billion), Luxembourg (2006: $34.65 billion, 2007: $2.5 billion). According to Mr Alpert, India has now surpassed China and South Korea in the Asian M&A league table and is behind only behind Japan.

He added that the global M&A saw record levels of deals worth $3.7 trillion in 2006. However, there has been a shift in the participants in the M&A market. Around three to four years ago private equity players contributed to around 10% of the deals. In 2006 however, this has now changed to 25%. PEs have been gaining force on the back of liquidity and a stable economy.

That could be the reason why players like Deloitte have launched a dedicated private equity practice here — Deloitte Corporate Finance Services India. The team in India is led by managing director Sandeep Gill and director Bomal Modi. Both were earlier part of the corporate finance practice of Deloitte & Touche LLP In London.

Vodafone, Essar deal today

Nearly a month after UK-based Vodafone clinched a deal for acquiring Hong Kong-based Hutchison Telecom International's controlling stake in HEL, Sarin will tomorrow announce the terms and conditions of the partnership with Ruias-promoted Essar, which holds 33% stake in the JV.

The two firms have also agreed to rename Hutch-Essar as Vodafone-Essar, which would start selling its products and services under the Vodafone brand in due course.

The partnership would be announced at a joint press conference by Sarin and Ravi Ruia, vice chairman, Essar Group, sources close to the development said. However, it was not confirmed whether the deal would be announced in the national capital or Mumbai, where HEL is headquartered.

Read more in The Business Standard article.

Bharti to invest $8b by 2010

Striving to retain the leadership position in the mobile industry, Bharti Airtel will invest a massive $8 billion by 2010 to have a 25% market share.

The aggressive expansion programme assumes importance in the wake of imminent entry of global mobile leader Vodafone through acquisition of Hutch-Essar, an announcement after which Mittal had said that Bharti would continue to be the numero uno player in India.

Read more inThe Times of India article.