Barakhamba Sales & Services Pvt Ltd, a company promoted by Hutchinson Whampoa and Essar group for operating cellular mobile telephony services in Karnataka, Andhra Pradesh and Chennai, has tied up loan worth Rs 1,021 crore from GE Capital Services India (GE Caps) and HSBC India.
Of this, Rs 681 crore would be the loan component from GE Caps, while the balance will be in the form of a guarantee and loan from HSBC India, sources said.
According to the sources, the loan amount will be used for investments in the cellular telephony projects being executed in the three circles. The project cost is expected to be Rs 1,074 crore.
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The company recently paid an upfront Rs 463.83 crore to the department of telecommunications (DoT) as license fee for the three circles.
However, Barakhamba's application to the Foreign Investment Promotion Board (FIPB) seeking permission for foreign direct investment (FDI) infusion had been hanging fire for over two months till last week when the company sent in the details about its debt-equity capital structure, since the proposed paid-up capital of the venture at Rs 20 crore, was found to be extremely low.
Sources said that the FIPB has finally recommended the case for consideration and approval by the cabinet committee on economic affairs (CCEA). FDI proposals envisaging a project cost of over Rs 600 crore have to be cleared by the cabinet -- all other proposals are approved by the union industry minister.
The company's Rs 20 crore paid up capital will comprise a Rs 9.8 crore (49 per cent) FDI component. The foreign equity will be subscribed to be AI-Amin Investments Ltd, an off-shore investment company in Mauritius and Array Holdings Ltd, both are part of the Hong Kong-based Hutchinson Whampoa Group. The resident shareholding of 51 per cent is being subscribed to by Sterling Cellular Ltd (46 per cent) and Essar Shipping (5 per cent).
In its clarification sent to the FIPB recently, the company while detailing the debt-equity structure expressed its intent to maintain a debt-equity ratio of 1:4:1. The shareholders also committed to subscribe to more equity in the approved proportion in due course, the sources added.