Bharti Telecom raises Rs 1380 cr to participate in the Airtel rights issue

Bharti Telecom, a holding company of Bharti Airtel’s initiators, raises around DKK 1,400 via corporate bonds in the local money markets to help it mainly participate in the company’s ongoing issue of 21,000 crore rights and also refinance some high cost debt.

The bonds were on offer on Monday on the exchange platform. Barclays is the solo bidder / investor in these newspapers, market sources said.

“It is not yet clear if they will sell part of their subscription down as they were only involved in the collection,” said one of the people.

BTL’s local bonds have three sets of maturities: 12 months, 24 months and 36 months and offer interest rates of 6.42%, 5.10% and 5.85% respectively.

“The money raised by BTL through bonds can be used by both Bharti Enterprises and Singtel to participate in the Airtel rights issue,” said a person with direct knowledge.

Analysts estimate that Bharti Airtel’s ongoing rights issue requires its promoters, SingTel and Bharti Enterprises in the Mittal family, to contribute $ 6,661 and $ 5,067, respectively. Of this, their immediate contribution of 25% corresponds in advance to 1,665 crore and 1,267 crore, respectively.

Bharti Enterprises and SingTel own 50.56% and 49.44% respectively in BTL, which in turn owns 35.80% of Bharti Airtel.

Airtel’s promoter group – the Mittal family and SingTel – own almost 56% of the telecommunications with the rest of the public. The Mittal family directly and indirectly owns around 24.13%, while SingTel owns 31.72% in Airtel.

Airtel’s shares closed 0.8% lower at Rs680.45 on BSE on Monday.

Overall, the interest rate mood changes with the Reserve Bank of India pursuing liquidity normalization. Companies are rushing to raise funds via bonds after the RBI took steps to cut easy money in its biannual policy earlier this month, resulting in a rise in interest rates, ET reported on October 11th.

Subscribers to the Airtel rights issue – which opened on 5 October and closes on 21 October – must pay 25% on application and the rest in two more calls that Airtel’s board may decide, however, within 36 months. Airtel shareholders will receive one share for every 14 held in telecommunications at Rs 535 per share. Unit, which implies a dilution of 7%.

Airtel has said that its promoter and promoter group will collectively fully subscribe to their total rights – or in relation to their shareholdings in the company. In addition, they will also subscribe for any unsubscribed shares in the issue.

Sunil Mittal-led Airtel plans to use the rights issue proceeds to strengthen its balance sheet and build a war chest to clear its statutory contingents, expand 4G networks and prepare for an upcoming 5G airwaves auction.

The rating agency S&P Global had recently said that it expects Airtel’s ongoing fundraising via rights issue to alleviate the likely impact on its economy from the upcoming 5G spectrum commitments, which it said was necessary for telecommunications competitiveness. It had added that the rights issue also signaled proactive leverage management. MacProTricks