RCom plans to raise Rs 4,300 cr

Money would be raised through qualified institutional placement of shares and a preferential offer to promoters

Anil Ambani-owned Reliance Communications (RCom) plans to raise Rs 4,300 crore by way of a qualified institutional placement (QIP) of shares and a preferential offer to promoters. The telco will use the proceeds to repay debt.

The shares to institutional investors worth Rs 3,000 crore have been priced at Rs 142.2 apiece, a six per cent discount to RCom's Tuesday closing price of Rs 151.4. In a statement to the stock exchanges, the company said the board has decided to offer preferential shares to promoters at the rate of Rs 150 apiece.

The RCom filing said the promoters and promoter group entities would be entitled to as many as 86.7 million shares (worth about Rs 1,300 crore) under the preferential allotment.

The QIP opened for subscription on Tuesday evening.

Like many others, RCom is taking advantage of the bull run in the market. Many Indian corporates are planning to raise funds from the equity markets and have sought shareholders' permission for the same.

"The proceeds of the QIP offering and the preferential allotment will be used primarily for repayment of debt and de-leveraging the balance sheet of the company," RCom said in the filing. RCom had a net debt of Rs 40,177.6 crore in the quarter ended March 31 and analysts have often cited high debt as the key concern for the company.

According to sources, promoter group entities will need to pay 50 per cent of the amount on the date of allotment of preferential shares and the remaining on or before March 31, 2015. This, sources pointed out, will ensure all the money will reflect in the books in the current financial year itself.

The promoters currently own a 68 per cent stake in the company. Apart from RCom, another Anil Ambani company - Reliance Capital - also plans to raise funds through the QIP route and has sought shareholders' approval for the same.