Chase, Il & Fs To Underwrite Loan To Cellular Licensee
Chase Manhnattan Bank and Mumbai-based IL&FS have agreed to underwrite a loan of over Rs 500 crore by Escotel Mobile Communications Ltd, the cellular licensee in Uttar Pradesh (West), Haryana and Kerala.
The total project cost for the three circles has been pegged at Rs 1,380 crore.
The Hong Kong office of Chase Manhattan will arrange a $115-million (about Rs 415 crore) foreign currency loan and IL&FS has been engaged to syndicate a rupee loan of some Rs 100 crore.
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The company expects to approach the debt markets both overseas and domestic next month.
The loans are expected to be fully backed by corporate guarantees by the promoters of Escotel Mobile.
The company is a 51:49 joint venture between Escorts Ltd and First Pacific Company Ltd of Hong Kong.
The company is likely to be the first cellular project to close conclude the sources of funding a finance deal in cellular services. Escotel will also be among the first Indian corporates in which promoters will pump in funds in the form of subordinated debt. Subordinated debt consists of unsecured loans to the company by promoters.
In addition to an equity requirement of Rs 310 crore until the fourth year of the project life, the promoters are exploring the option of pumping in about Rs 90 crore as subordinated debt.
The remaining Rs 450-odd crore will be sourced partly through suppliers credit being provided by Lucent Technologies formerly an equipment arm of AT&T and unsecured loans, sources said. The Escotel project is expected to break even by the fourth year of operations.
Less than two months after launch of services in Uttar Pradesh (West), Haryana and Kerala, the company has some 14,000 bookings for cellphones already.
The firm plans to operationalise cellular services in some 27 cities by the end of March.
Uttar Pradesh (West), which has Escotels cellular services in four cities, now plans to extend services to 14 cities by the second week of March.
Similarly, Escotels Kerala network is operational in two cities now and is expected to be extended to seven more cities.
In Haryana the company will have six cities with cellular services by the end of this month.
Escotel has already set up a microwave radio backbone (or transmission medium) in each of the three circles, which is geographically analogous to a state.
The backbone cost the company a little over Rs 100 crore, sources said.