Air­tel In­ter­na­tional be­gins cash pur­chase of its $1.5-bn bonds to re­duce debt

Business Standard - - COMPANIES -

Bharti Air­tel on Satur­day said it would pre-pay $1.5 bil­lion debt with its sub­sidiary Bharti Air­tel In­ter­na­tional (The Nether­lands), us­ing the pro­ceeds it got from six global en­ti­ties in­vest­ing in its Africa unit. Bharti Air­tel In­ter­na­tional (The Nether­lands) B V com­menced cash pur­chase of $1.5 bil­lion, 5.125 per cent Guar­an­teed Se­nior Notes, which were due in 2023, Bharti Air­tel said in a reg­u­la­tory fil­ing.

This of­fer, it said, has been made with a view to “proac­tively man­age its cap­i­tal struc­ture, re­duce gross debt and lever­age by ac­quir­ing the Notes funded out of eq­uity pro­ceeds and also pro­vide liq­uid­ity to Note­hold­ers at a pre­mium to the mar­ket.” Bharti Air­tel group con­tin­ues to delever­age and pur­sue its strate­gies to­wards that end, it added. “In line with this, it has been ac­tively ex­plor­ing var­i­ous eq­uity driven ini­tia­tives, in­clud­ing those pre­vi­ously an­nounced re­gard­ing its Africa busi­ness, so as to proac­tively man­age its bal­ance sheet and cap­i­tal struc­ture to align them to the group’s core con­ser­va­tive phi­los­o­phy,” it said.

Bharti Air­tel In­ter­na­tional’s (The Nether­lands) par­ent Air­tel Africa Ltd, a UK in­cor­po­rated sub­sidiary of Bharti Air­tel, re­cently made a suc­cess­ful pri­mary eq­uity is­suance of $1.25 bil­lion to six lead­ing global in­vestors, in­clud­ing War­burg Pin­cus, Te­masek, Sing­tel, Soft­Bank Group and oth­ers. “The pro­ceeds of this eq­uity is­suance are in­tended to be used to re­duce Air­tel Africa’s ex­ist­ing debt of ap­prox­i­mately $5 bil­lion on the date of the an­nounce­ment,” it said.

The pro­ceeds of this eq­uity is­suance are now fully re­alised and avail­able as cash. The com­pany also car­ries or­ganic cash on its bal­ance sheet.

“The com­pany wishes to utilise the pro­ceeds of this eq­uity is­suance and the cash avail­able to it to re­duce its ex­ist­ing debt by of­fer­ing to pur­chase ‘any and all’ of the Notes pur­suant to the Ten­der Of­fer. “Via the Ten­der Of­fer, the com­pany is also pro­vid­ing liq­uid­ity to the Note­hold­ers at a spec­i­fied pre­mium over the mar­ket price at launch,” the fil­ing said.

This of­fer is in ad­di­tion to the pre­vi­ously an­nounced ten­der of­fer cum re­pay­ment of ^1 bil­lion 4 per cent notes ma­tur­ing December 2018, for which fund­ing has been drawn and avail­able as cash with the firm.

Ear­lier this week, Moody’s In­vestors Ser­vice had placed Bharti Air­tel’s rat­ing on re­view for down­grade on low lev­els of prof­itabil­ity and ex­pec­ta­tion of weak cash flow.

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