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May 14, 2001
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Money > Business Headlines > Report May 14, 2001 |
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FIs bracing to fund VSNL buyoutBaburajan K in Bombay Financial institutions, which have put a freeze on loans to cellular operators following the government's nod to limited mobility, are gearing up to extend loans to potential buyers of the Videsh Sanchar Nigam equity. Domestic institutions, including IDBI and ICICI, are open to part-finance the large investment required to fund the VSNL buyout as they are considering international long distance telephony as a viable business model, top institutional sources said. Going by the current marketcap of VSNL, strategic investors may have to cough up around Rs 45 billion for picking up a 45 per cent (the initial 25 per cent plus an additional 20 per cent via open offer) stake. FIs are framing strategies to formally approach bidders to offer funds. VSNL also has a thriving Internet service providing business and will get into cellular and domestic long distance telephony as well, according to its disclosed plans. Though FIs are open to financing telecom companies, they are unlikely to pick up stake in any consortia, sources said. The expression of interest in funding the bidders who have submitted the expression of interest assumes significance as several FIs had earlier announced their apprehension in financing new basic and cellular ventures of telecom companies due to the recent wireless in local loop imbroglio. Senior officials with companies such as Videocon, BPL and Bhartis said they would like to use debt as well as internal resource to part-fund acquisition plans if they win the bid. Since these companies are in the initial stages of negotiations with the government to pick up stake in VSNL, officials declined to comment further on the issue. As many as six firms including Tatas, Reliance, Birlas, Bhartis, BPL and Videocon have submitted an expression of interest for VSNL. However, FI sources said, institutions are cagey about the likely valuation of VSNL as there is no benchmark price available. They also do not want to end up in a Balco like situation where the consideration of the transaction was an issue. Powered by YOU MAY ALSO WANT TO READ:
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