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Malaysian mogul T Ananda Krishnan to lose $7 bn due to failed Aircel foray

The estimated losses also include about $800 million that Krishnan spent when he first bought the business in 2006

Elffie Chew & George Smith Alexander | Bloomberg  |  New York 

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The lenders want Aircel promoter, Malaysia-based Maxis, to invest at least $1 billion into the company so that it can meet financial obligations

Malaysian tycoon, T. Ananda Krishnan’s company is poised to lose a total of about $7 billion from a failed 12-year foray in the Indian wireless market, marking his biggest-ever hit on a soured investment, people with knowledge of the matter said.

Krishnan-backed mobile carrier Aircel Ltd. filed to start proceedings in India, the company said Wednesday, confirming an earlier Bloomberg reports the move was imminent. Communications Bhd., a holding company for some of Krishnan’s telecom ventures, has made about $3.4 billion of shareholder advances to Aircel that it now won’t be able to recoup, according to one of the people.

Over the years, Communications also injected around $1.2 billion into Aircel in return for common stock and subscribed to $1.6 billion of redeemable preference shares, the person said, asking not to be identified because the information is private. Both classes of securities are expected to be wiped out in the proceedings, according to the people.

The estimated losses also include about $800 million that Krishnan spent when he first bought the business in 2006.

Krishnan has no bank borrowings related to the Aircel investments, one of the people said. While Communications currently doesn’t expect to recoup funds from any potential selloff of Aircel’s assets, the process is at an early stage and the situation could change, the people said.

Communications is 45 percent controlled by KrisBumiputeragh his private investment vehicle Usaha Tegas Sdn. Saudi Telecom Co. owns a 25 percent interest, while 30 percent is held by so-called bumiputera, or ethnic Malay investors.

A representative for Communications declined to comment, while Aircel Chief Executive Officer didn’t answer calls to his mobile phone seeking comment. Saudi Telecom has no financial exposure nor obligations to Aircel after amending the shareholder agreements relating to the Indian carrier in December 2013, a representative for the Saudi company said in response to Bloomberg queries.

Krishnan, 79, is Malaysia’s third-richest man with an estimated net worth of $6.1 billion, according to the Bloomberg Billionaires Index. He controls stakes in Bhd., the Southeast Asian nation’s biggest mobile carrier by subscribers, as well as pay-TV operator Astro Malaysia Holdings Bhd. and oil services provider Bumi Armada Bhd. The tycoon also has interests in properties in the U.K. and Switzerland.

First Published: Thu, March 01 2018. 22:51 IST