HFCL raises $33mn through foreign convertible bonds

Telecom equipment manufacturer HFCL has said it has raised $33 million, including a green shoe option, through the issue of foreign currency convertible bonds (FCCBs).

The issue was closed this Monday at London and the company received subscription for 330 bonds of $ 100,000 each. A second tranche of $ 10 million is being closed shortly. The bonds will be listed on the Luxembourg Stock Exchange.

"Global FIIs including Indus Capital, Kelusa Capital and Tracer Capital have picked up the convertible bonds of HFCL, apart from other international funds," the company said in a release.

Once converted, this would result in 17 per cent of HFCL equity being owned by the FIIs. Indus Capital would end up with around 10 per cent in the company.

HFCL Managing Director Mahendra Nahata said acquisition of a stake in HFCL by major global investors and also the recent acquisition of a 5 per cent stake by Emerging Markets Management showed renewed confidence of international investors in the company.

"Over the past two years, HFCL has completely streamlined and restructured all aspects of its business and corporate governance. The balance sheet is being restructured, the order book is extremely strong and this new capital infusion will enable HFCL to take advantage of the huge capital expenditure boom in the Indian telecom industry," Nahata said.

"We are enthused at this vote of confidence shown by international institutional investors in HFCL's ongoing turnaround story. Our order book is extremely strong and this new capital infusion will enable us to take advantage of the huge capital expenditure boom in the country," he said.

HFCL's order book includes contracts from Reliance Infocomm and business from public sector Bharat Sanchar Nigam Ltd (BSNL) and Mahanagar Telephone Nigam Ltd (MTNL).

The turnaround strategy that was implemented around two years ago had focused on manufacture of high-end telecom, research and development, reduction of interest cost, restructuring of debt, among other initiatives.

The moves have led to the interest rate burden getting reduced from a high 14 per cent to nine per cent and also longer debt repayment schedules. That, and the overall boom in telecom equipment demand, has meant that the company is also undertaking turnkey work in the export market.