Reliance Communications raises $300 million

Reliance Communications (RCom) conducted its first international bond issue on Monday in which the company raised $300 million through Regulation S (Reg S) bonds for capital expenditure or any other permissible end-use as prescribed by the Reserve Bank of India.

In a Reg S bond issue, the notes are offered to non-US residents and qualified institutional buyers under an exception to US securities laws enacted in 1990, and do not enjoy the same legal protection as other issues. The tenure of these are 5.5 years and the coupon rate is 6.5 per cent.

The bonds have been rated 'Ba3' by Moody's and 'BB-' by Fitch Ratings. The issue arrangers were Standard Chartered Bank and DBS Bank.

"The rating on the proposed notes is in line with the corporate family rating of RCom as the proposed notes are senior secured obligations of the company," said Moody's in a release.

According to Fitch, RCom will use part of the note proceeds to fund the $173 million up-front payment for spectrum won in the March auction and the rest for capital expenditure.

The company had a net debt of Rs 36,767 crore at the end of December 2014, which reduced by about Rs 4,000 crore during the third quarter.

For the same quarter ended December, RCom reported an 86 per cent year-on-year increase in its consolidated net profit to Rs 201 crore, on the back of high data usage and lower finance costs. It generated operational cash flow (earnings before interest, taxes, depreciation, and amortisation) of Rs 1,851 crore and invested Rs 348 crore in capital expenditure during the quarter. It remains free cash flow positive and this is expected to continue.