Birla-Tata-AT&T (BTAL) is exploring the possibility of privately placing equity shares with financial investors to part-fund its cellular project in New Delhi and other expansion plans.
Investment banker DSP Merrill Lynch is working with the promoters of BTAL to finalise the blueprint. "We are planning to privately place shares with financial investors. But plans are at nascent stage," a top BTAL executive said.
The company is planning to raise around $100-$150 million. BTAL, which has a cellular user-base of 6.75 lakh, has been valued in the range of $1-1.2 billion. The size of the stake that would be offered to investors will depend on the final negotiations with investors, investment banking sources close to the deal said.
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BTAL executives said, "Though Birla-Tata-AT&T could be merged with BPL Communications at a later stage, the proposed combined entity will not be able to raise any fund from investors as they are yet to wrap up the merger. Since the merger would take some more time, BTAL will be going alone with the private placement."
The proceeds through the placement will be utilised for rolling out mobile services in New Delhi. BTAL has recently bagged the circle as a fourth cellular operator. The company has been eyeing some circles for acquisitions as well. However, the funds will not be earmarked for acquisitions, sources said.
BTAL, is reported to have invested around Rs 300 crore for launching cellular service in Delhi by June 2002. At present, BTAL has operations in Andhra Pradesh, Maharashtra, Gujarat, Chattisgarh, Madhya Pradesh and Goa circles. In 2001, the company recorded 133 per cent growth in cellular subscriber-base.
BTAL, a three-way venture between the Tatas, the Birlas and AT&T, is also negotiating with banks and financial institutions to restructure its debt in order to reduce interest rates. The company hoped to bring down the interest rate by an average of 3 per cent on its debt of around Rs 2,000 crore following the loan rejig.
The Rs 2,000 crore debt includes a dollar loan of $120 million and a rupee loan of Rs 1,500 crore, of which around Rs 400 crore is of shorter tenure. While Bank of America and Deutsche Bank will assist with the restructuring of the dollar loan, talks were on with the Industrial Development Bank of India to recast the Rs 1,100 crore term loan.