Ruias funding Algoma acquisition through senior notes & loans

Essar Global will raise $900 million through a combination of senior notes and loans to fund its acquisition of Canada’s Algoma Steel, reported Economic Times. The non-recourse fund raising exercise by Essar Global is the second-largest such transaction by an Indian steel company, after Tata Steel’s almost $7 billion loan to finance its acquisition of Corus.

The Ruias’ international holding company had acquired Algoma in April for $1.58 billion in an all-cash leveraged buyout. Essar Global’s acquisition is considered the second biggest by an Indian company in North America, after Hindalco paid $6 billion to buy Atlanta-based Novelis in February.

To finance its Algoma acquisition, Essar Global will sell $450 million of senior notes, recoursed to the Canadian company’s balance sheet. The eight-year notes, denominated in dollars, may yield 9.75% to 10%. UBS is the financial advisor to the offer.

Essar Global also plans to issue $450 million in loans, based on Algoma’s earnings. The group’s own contribution will be about $500 million. It could not be ascertained how the rest of the acquisition amount — about $100 million — will be raised.

ChrysCapital sells Global Vantedge BPO to Essar-owned Aegis Communications

ChrysCapital has sold one of its portfolio companies, Global Vantedge, a credit and receivables management BPO to the Essar-owned Aegis Communications for around Rs. 100 crores. ChrysCapital had set up the Global Vantedge in 2001 and owned 75% in the firm. Global Vantedge is headquartered in the US and employs around 1500 people in two centres in Gurgaon. It specializes in credit and receivables management and its customers include credit card, telecom and auto companies, mostly in the US and UK.

Aegis has a turnover of around $180 mn and employs over 9000 people in India and USA, operating from 24 centres and 18 cities around the world. It offers multi-channel customer relationship management services including customer acquisition and customer services, back office services, as well as value-added services. These services are offered across verticals such as telecom, retail, financial services, energy, education and logistics. The credit and receivable management services of Global Vantedge will strengthen Aegis’ customer relationship management portfolio. Essar and Deutsche Bank had bought 80% share in Texas-based Aegis Communications for $28 mn in November 2003. Subsequently, the Essar Group increased its stake in the company.

Read The Economic Times article.

Essar Group to de-list Essar Steel and Essar Oil

The Essar Group plans to de-list Essar Steel and Essar Oil following a similar move by the group on Essar Shipping last month. The proposed de-listing is aimed at gaining more flexibility in running the companies. The group has already de-listed its BPO subsidiary Aegis Communications and telecom arm Essar Teleholdings from the US and domestic bourses. The Essar Group is in the midst of organizational restructuring and might list its holding firm Essar Global with an overseas bourse, though not as of now. Six holding companies for six businesses, namely, power, steel, energy, shipping, communications and special economic zones, have been set up to handle the group’s interests across the globe.

Read the Business Standard article.

Vodafone also in the race for Hutch

After Reliance, Maxis, Bharti and Essar itself, the Hutch-Essar JV seems to have found a new suitor. It seems that Vodafone, the British telecom giant, is reported to bid for Hutch-Essar. UBS, which is Vodafone’s house banker, is said to be advising the company on financing and acquisition strategies.

Both Vodafone and UBS have refused to comment on the development.

Vodafone is selling its stake in its holdings across market as it faces severe investor backlash. It sold its 25% stake in Swisscom for about $3.5 billion and a similar stake in a Belgian wireless operator to Belgacom; before that it had exited companies in both Sweden and Japan. The Japanese transaction was valued at about $16 billion.

In India, Vodafone has invested in a 10% stake in Bharti Airtel, the value of which now is estimated to be around Rs. 16, 000 crores. Vodafone might consider selling its stake in Bharti for financing the acquisition.

Read the article from The Economic Times.

Ambani goes for the kill, to buy out Ruia's stake as well

Finally, Anil Ambani has made his intentions absolutely clear. Reliance Communications will buy out Hutch-Essar in its entirety. Nimesh Kampani, representing the Ruias is believed to have held meetings with Anil Ambani. Various parties as interested in buying out Hutchison’s stake in Hutch-Essar are doing the rounds of investment circles. These include Ruias themselves raising debt from banks and buying Hutch’s stake in the JV. Bharti’s Mittals are also heard to be interested in buying out the company. Even the name of the Tatas has been mentioned. Maxis, the Malaysian telecom company, is also set to bid for Hutch-Essar. The Ruias stand to gain around $4-5 bn if they sell their stake to Reliance Communications. Ruias are being advised by Morgan Stanley and Goldman Sachs. UBS is advising Ambani on the deal. Buyout funds like Blackstone, Texas Pacific, Carlyle and Kohlberg Kravis Roberts, among others, are supporting Reliance to structure the financing. With about $10 billion through cash to buy equity and around $2-4 billion as debt from major foreign banks, Reliance seems to be the frontrunner in getting the Hutch-Essar telecom business.

Read the article from Business Standard.

Reliance Comm dials banks for Hutch deal

Anil Ambani is leaving no stone unturned to acquire the prized 67% stake of Hutchinson Whampoa in Hutch-Essar. As of latest reports, Reliance Communications has tied exclusivity agreements with a number of foreign banks, presumably, Citibank, HSBC, ABN-AMRO and UBS. This means that not only will these banks provide the necessary debt for the transaction, but the agreements will also prevent them from working with any other prospective or existing bidder. This agreement with the said four banks is crucial, as all have expertise in multi-billion dollar cross-border acquisition financing and their experience would have been of enormous use to rivals. RCL is already in talks with private equity funds such as Kohlberg Kravis Roberts & Co (KKR), Blackstone and Texas Pacific Group for equity financing.

For more, read the following articles The Economic Times, The Financial Express and Business Standard.

The Hutch stake: Game on

Hutchison’s 52% stake in Hutchison Essar Ltd. seems to be gathering a high level of interest amongst the telecom players and equally with PE funds. The Ruias are believed to be looking at buying their partners stake, for which they plan to approach a few banks, as reported by Business Standard.

The race is already on with a number of players lining up for the stake including Reliance Communications in tie up with a few PE funds, Egyptian telecom giant Orascom and Malaysia's Maxis

The Anil Ambani groups Reliance Commnications has reportedly tied up with four American private equity funds -- Blackstone, Texas Pacific Group, KKR and Carlyle, who collectively have equity investments of $100 billion. Reliance Communications would endeavor to be the majority domestic partner if the bid comes through reported the Economic Times.

Orascom, which has over 19 per cent stake in Hong Kong-based HTIL is understood to have appointed Deutsche Bank as their adviser while Standard Chartered is supposedly advising Malaysia’s Maxis.

Goldman Sachs is the advisor to Hutchison and will evaluate all the bids

Go to article from The Economic Times

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