The Rs 300-crore Reliance Telecom issue is expected to close this weekend. The issue, with a greenshoe option, is set to collect more than Rs 500 crore and hence retain Rs 200 crore. It is being bailed out by the State Bank of India which will commit around Rs 300 crore, primarily from the Resurgent India Bond proceeds.
The issue, the largest tax-free infrastructure fund raising exercise in the private sector, opened a month ago but faltered because of an ambiguous clause.
The clause, section 10 (23) G, stipulates that the investors, primarily banks, can only avail a benefit to the extent of the net of the interest cost (on borrowed funds) and the tax rebate (on the investment).
The debenture, rated AAA by Crisil, offers either a 10-year straight instrument with 11 per cent tax free returns or an average maturity of nine years with 10.75 per cent interest.
The second debenture is to be redeemed at the end of the eighth, ninth and tenth years in equal amounts.
The issue is guaranteed by ICICI but the investors have the option to forgo the guarantee and earn higher returns of 1.5 per cent till the fifth year and 1 per cent more in the later years.
