Bankers tell fund-starved Loop Mobile to sell assets

Lenders, with Rs 600-cr exposure to telco, want it to sell properties to repay loans

Loop Mobile, which lost its pan-India wireless telephony licences in the aftermath of the 2G telecom spectrum scam, has been asked by its bankers to sell its towers and real estate assets, including its headquarters in Mumbai, to raise funds to repay them.

The company, which operates only in the Mumbai circle, would raise about Rs 150 crore. It has been agreed the company would use the net proceeds of about Rs 130 crore from the transaction towards the payment of a few instalments to these banks, which have exposure of about Rs 600 crore to the company.

When contacted, a Loop Mobile spokesperson said the sale of real estate was part of the company’s monetisation programme. “It is a sale and lease-back proposal, which is under consideration and discussion at the present juncture. The said real estate properties are currently hypothecated to the consortium of bankers and, therefore, the proceeds would go to reduce bank outstandings, improving Loop Mobile’s debt servicing ability. It would have no impact on the net assets of the company,” the spokesperson said.

Soon after the Supreme Court cancelled the licences for 21 circles (except Mumbai) issued to its subsidiary Loop Telecom, the company’s losses increased. For 2011-12 (the last available figures), the company recorded a loss of Rs 53 crore, on revenue of Rs 715 crore.

With single-circle operations, bankers say the company has no option but to scout for a new equity partner with pan-India presence. With the government planning to come out with new merger and acquisition (M&A) guidelines by November, Loop would be one of the top contenders up for sale.

The company and its promoters, along with two directors of the Essar group, are facing trial at a Central Bureau of Investigation (CBI) court in Delhi for alleged conspiracy and charges of cheating the Department of Telecommunications. The CBI alleged when Loop had applied for licences, the Ruias held stake of more than 10 per cent in Loop Telecom, while also owing stake in another telecom operator (Vodafone Essar). This, the agency added, was a violation of the final Unified Access Services Licences guidelines for acquisition of telecom licences.

The Ruias, Loop and its promoters (the Khaitan family) have denied the allegations.

Bankers say Loop would need a fresh dose of funds, as the licence for its 900-MHz frequency spectrum is set to expire in November 2014. According to a plan by the government, the spectrum held by Loop Mobile are to be auctioned, along with that held by operators such as Airtel and Vodafone, as their licences expire at the same time.

Loop has appointed an international arbitrator to get its licence fee of Rs 1,600 crore back from the Centre.
CREDITORS KNOCKING

• Loop Mobile to raise Rs 150 cr, of which Rs 130 cr is to be utilised to repay installments of principal to banks
• Loop says the sale of properties is part of an asset monetisation programme
• Loop’s losses rose after the SC cancelled its licences for 21 circles