Essar Comm to raise $3.59-bn syndicated loan

LONDON: Essar Communications on Tuesday said it has mandated four international banks to raise a syndicated loan of 3.59 billion dollars to refinance existing debt and fund further investment and expansion plans of the group.

The loan facility enables the telecom arm of Ruias- promoted conglomerate Essar group to monetise the liquidity rights agreed with Vodafone, which gives the UK firm an option to buy Essar's stake in Indian operator Vodafone Essar.

Under the terms of partnership announced in March, Essar will have an option to sell its 33 per cent stake in Vodafone Essar for five billion dollars or to sell shares worth 1-5 billion dollars to Vodafone at an independently appraised price.

The loan facility will be used to refinance existing debt and to fund further investment and expansion plans of the Essar group, a company statement said here.

ECIL said it has mandated BNP Paribas, Citigroup Global Markets Limited, Commerzbank AG and Standard Chartered Bank to arrange a fully-underwritten 3.59 billion dollars term loan on their behalf. Standard Chartered has underwritten 35 per cent of the total amount, Commerzbank 25 per cent, BNP Paribas 20 per cent and Citigroup 20 per cent.

The loan facility, which has a maturity date of December 8, 2011 and will pay a margin of 90 basis points per annum, was launched on Monday to a wide group, including Vodafone relationship banks, Essar relationship banks and new banks with whom Essar plans to develop a relationship in the future.

Senior management from both Essar and Vodafone will hold a presentation in London for invited banks on September 28, 2007, while Essar management will also host further bank meetings in Dubai on October 1, in Singapore on October 3 and in Taipei on October 4. One-on-one meetings will also be held in Hong Kong on October 5.