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| HCL Tech to raise Rs 3,000 cr for refinancing Axon debt |
| Shivani Shinde & Sudeep Jain / Mumbai Aug 08, 2009, 00:45 IST |
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Delhi-based IT services company HCL Technologies is understood to have granted Standard Chartered Bank the mandate to raise close to Rs 3,000 crore for refinancing the debt the company raised to acquire Axon Group, the UK-based IT services provider.
The company plans to raise around Rs 2,500 crore as foreign currency bank loans. The remaining amount will be raised through non-convertible debentures (NCDs). The loan will be for a period of at least five years. The company’s proposed NCD offering has been rated by Icra as LAA+, indicating low credit risk.
Bankers and analysts believe the new loan could be raised at US Libor plus 200 to 250 basis points and the interest of NCDs would be in the range of 9-10 per cent. Leading banks believed to be competing to get the mandate were State Bank of India, ICICI Bank, Citibank and RBS.
“Standard Chartered has received the mandate as the bank has already raised a short-term bridge loan for the company. While the short-term loan of $585 million (around Rs 2,785 crore) comes for payment only in December, the company has tied-up early, as it wanted to take advantage of the low prevailing rates in the market,” said a source close to the development.
When asked, HCL Technologies wouldn’t give any details of the debt being raised, as the company is in its silent period before announcing its annual results. Anil Chanana, Chief Financial Officer, had in an earlier comment to Business Standard’s query remarked: “The maturity of the loan is more than six months away. Once we are ready with the plans, we would share with you. HCL Tech continues to generate cash. For the first nine months ended March, 31, 2009, it has generated $172 million (around Rs 800 crore) as operating cash flows.”
A spokesperson from Standard Chartered Bank said, “For reasons of client confidentiality, you would appreciate that we cannot comment.”
HCL Technologies had raised a foreign currency loan of $585 million from Standard Chartered and additionally it had paid around $100 million (around Rs 475 crore) through internal accruals. The company had acquired UK-based Axon for £441 million (around Rs 3,000 crore). The terms of the debt were at US Libor plus 300 basis points.
“If the company is able to replace the existing Libor plus 300 basis points loan by a lower one, it will be beneficial. This will also mean that the interest outgo will come down,” said an analyst on condition of anonymity.
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