Even as it prepares to bid for Hutchison Essar, Reliance Communications has sought government approval for sponsoring a secondary Global Depository Receipts (GDR) offering of up to $1.2 billion, representing 6.53 per cent of the total paid-up equity shares of the company.
This will include a green shoe option of 20 per cent ($200 million). The offering will be made at international stock exchanges or to institutional investors in Japan, for which a time schedule has not been indicated.
In a regulatory filing with the Ministry of Finance, the company said that going by the current price of approximately Rs 400 a share, an aggregate offer size of $1.2 billion (including the customary green shoe option) would comprise 13.35 crore shares, though the price and market conditions at the time of the issue could vary the number.
The market price of a Reliance Communications equity share was Rs 442.05 on December 1, three days before the company’s board passed a resolution for the sponsored GDR offering.
In a separate move, the company is believed to have roped in Standard Chartered Bank to arrange for $2 billion in debt, which is also expected to be used for the proposed acquisition of Hutchison Essar
In the filing for the proposed secondary GDR, the company said the offering would broaden its investor base, increase its floating stock at international stock exchanges, thereby attracting large global funds, and enhance the company’s global brand. The company’s GDRs are listed on the Luxembourg Stock Exchange.
Source : BS