Sources say that the deal to sell of Reliance Communication’s tower business could be finalised soon, as three final bidders have already submitted their bids.
Advertisement
“The primary driver for the deal for RCOM is to reduce their leverage position since with high debt the company was constrained from making fresh capex investments, ” said Piyush Jain, financial research analyst with Morningstar Investment Adviser.
Reliance Communications (RCOM) has signed a non-binding Term Sheet with Tillman Global Holdings, LLC and TPG Asia (TPG) in relation to the proposed acquisition of RCOM’s nationwide tower assets and related infrastructure by Tillman and TPG.
The company is looking at realising Rs 22,000 crore from sale of towers, which will be transfered from its subsidiary Reliance Infratel Ltd into a separate special unit that will be fully owned by the two private equity firms, and another Rs 8,000 crore from sale of inter-city and intra-city optic fiber infrastructure.
The Mumbai-based company did not disclose the value of the telecom tower deal, which is subject to due diligence, definitive documentation, etc.
Rcom will continue to be the anchor tenant on towers transferred.
It said there was no certainty a deal would be concluded, adding that the company, headed by billionaire Anil Ambani, planned to use the proceeds of the planned deal to reduce debt.
In a statement on Friday, RCom said it has entered into an exclusivity agreement with Tillman and TPG that is valid until 15 January 2016, to allow time to hammer out the details of the transaction. This apart, the annual interests costs are also expected to come down by as much as 85 to Rs. 600 crore.
Advertisement
Shares of the company declined Rs 2.6, or 3.11%, to trade at Rs 81.05.
