A proposed $123 million (Rs 440 crore) external commercial borrowing (ECB) programme of Tata Cellular -- the joint venture between the Tatas, Bell Canada and American International Group (AIG), holding the cellular licence in Andhra Pradesh -- has been held up due to delays in clearances from the Union finance ministry.
Lead arrangers and underwriters of the issue (the second from the Indian cellular industry), Bank of America and Toronto Dominion, had scheduled the ECB offering to hit the markets by July-end.
The ECB board of the finance ministry, sources said, had not been able to meet to clear the issue. They now expect the issue to open in late-August or September.
The Tata Cellular issue is not expected to face the initial problems as witnessed by the $283-million Birla-AT&T ECB offering during the roadshows and subsequent negotiations among bankers The company holds the cellular licence in Maharashtra and Gujarat. The Birla-AT&T ECB recently closed in the Singapore, Hong Kong, Japan and European markets.
The offering, which carried an average coupon rate of some 225 points over the London interbank offered rate (Libor), received a lukewarm response from bankers when it opened. Bankers had attributed such a reaction to 'over-aggressive projections and non-commensurate pricing'.
The issue, however, was received well by banks in the domestic market, which found the coupon rate attractive in a falling interest rate regime.
Birla-AT&T reportedly raised the $26 million (Rs 93 crore) domestic tranche in face of this increased demand. This deal was also arranged and underwritten by BankAm and Toronto Dominion.
A BPL-US West ECB issue is next on the cards from the Indian cellular industry. Sterling Cellular is also reportedly firming up plans for a similar offering.
Cellular companies have been forced to tap foreign debt markets for funds after domestic financial institutions (FIs) were averse to fund their projects. The FIs had quoted the high licence fees and unrealistic projections as the main reason for their reluctance.
Meanwhile, sources denied rumours that Bell Canada might be reducing its 39 per cent equity in Tata Cellular. The Candian company, they said, were comfortable with the projections of the cellular project. It, however, is likely to divest its 39 per cent equity in Tata Teleservices, the basic telecom licensee in Andhra Pradesh.
