49% Pvt Placement In Bpl Cellular

The Bangalore-based BPL group is privately placing 49 per cent of the equity of BPL Cellular Holdings with Peregrine-led Asia Infrastructure Fund (AIF) and US insurance giant American International Group (AIG). Analysts estimate the deal to be worth about $200 million (about Rs 720 crore).

The private placement comes barely six months after BPL Cellular's aborted American depository receipts (ADRs) issue in October 1996 and is seen as an attempt to bridge the funds gap caused by the issue's withdrawal. The ADR offering was to net about $215 million including a 15 per cent greenshoe option.

BPL had planned to shed 22 per cent of its equity stake in the company. Since the dilution is now just less than 50 per cent, analysts say the share price would be considerably less than the proposed ADR price of $16 per share. The group could not conclude the ADR issue even at $10 a share in October.

 

Sources in Peregrine and the industry confirmed BPL Cellular's plans of selling a part of its equity but said the deal had yet to be formalised. The selloff, once completed, is expected come as a welcome relief for the group as it would infuse cash to fulfil equity obligations in the joint venture with US West, besides creating a source of funds for the group's business plans.

BPL Cellular had a working capital shortfall of Rs 93 crore and a net capital deficiency of Rs 687 crore in 1996. It incurred a net loss of $117.2 million (Rs 402 crore) in fiscal 1996 and expects a capital spending of $136 million (Rs 466 crore) in fiscal 1997 and another $96 million (Rs 330 crore) in fiscal 1998. The spending estimate include expenses on account of licence fee, purchase and installation of infrastructure equipment and real estate acquisitions.

The company had raised about Rs 169.4 crore from affiliates of the BPL group through an equity issue and loans. It had also entered into loan agreements for Rs 60 crore with various financial institutions, which the company had hoped to repay out of the ADR proceeds.

BPL Cellular's equity is closely held by the BPL group with more than 43 crore shares. The shares are held by small affiliates of the BPL group, which is controlled by the Nambiar family. These include Epsilon Systems India, Nambiar International Invest-ment and Namfil Finance.

The company was incorporated in December 1993 as a holding company with a 60.5 per cent stake in BPL Mobile Communications Ltd (the Mumbai cellular operator), a 100 per cent stake in BPL Wireless Telecommunication Services Ltd and a non-controlling 50.2 per cent stake in BPL US West Cellular.

The deal, if finalised, would be the second publicly-announced investment by AIF in Indian cellular businesses. Last year, the fund had picked up a stake in a holding company of the Chennai-based Sanmar group. The holding company routes the group's 20 per cent investment in JT Mobile, which holds the operating licences for Karnataka, Andhra Pradesh and Punjab.

For AIG, the investment is the fourth in Indian telecom ventures. The group