Hutch Int lent $324 mn for 12% in Essar

Hutchison Telecom International Ltd (HTIL) and its subsidiaries extended loans totalling nearly $324.5 million to two firms, owned one each by Analjit Singh and Hutchison Essar Director Asim Ghosh, for together acquiring a 12.26 per cent stake in Hutchison Essar.

Out of this, the companies utilised a total of $288.8 million to buy the stake.

According to information made available by HTIL to the Stock Exchange of Hong Kong and posted on its website, the company gave a credit facility of $124.5 million to Goldspot Mercantile Company Pvt Ltd, a holding company in India owned by Ghosh.

This company, in turn, acquired a 23.97 per cent stake in a joint venture company called Telecom Investments India (TII) for $110 million through a wholly-owned subsidiary.

Similarly, HTIL gave a credit facility of $200 million to Scorpios Beverages Pvt Ltd, an Indian investment holding company owned by Analjit Singh.

This company acquired a 38.78 per cent stake in TII for $178.5 million. The acquisition of the 62.76 per cent stake by the two companies ultimately translates into a 12.26 per cent interest in Hutchison Essar.

Singh was not available for comments. But, Ghosh said this was being done to simplify the equity structure of the company in anticipation of a possible listing.

In consideration of HTIL agreeing to provide credit support, put and call options to acquire equity interests in Goldspot Mercantile as well as Scorpios Beverages, and their promoter companies, have been granted to the HTIL group.

This means that the share capital of these investment companies can be purchased by HTIL in the next 10 years at par value. Therefore, the appreciation accrued to the investment made by these companies will not have any beneficial impact on Goldspot Mercantile and Scorpios Beverages.