Funds raised via bond offering to refinance debt: Rolta

Written By Unknown on Jumat, 18 Juli 2014 | 23.25

In an interview to KK Singh, Chairman & Managing Director, Rolta said the money raised from the bond offering would be used to refinance debt but clarified that it would not bring down the debt on books, since it only be would be replacing the high costs debts.

The IT solutions provider, Rolta India's subsidiary Rolta Americas LLC raised USD 300 million through bond offering. This offering was oversubscribed by more than 8 times with order book of over USD 2.4 billion with demand from a high quality investor base, banks etc.

However, refinancing would help them save around 2 percent on interest costs, he added.

Going forward he is hopeful of the defence contract coming through from the government in about six to eight months.

Below is the transcript of KK Singh's interview with Ekta Batra & Reema Tendulkar on CNBC-TV18.

Ekta: Can you tell us whether the entire amount is now completely raised, what was the subscription like and what will the funds be utilised for?

A: This has been very well received. It is a record thing because from India no other company of our size or this rating has raised such kind of bonds. We got overwhelming response of almost eight times, the book was build to about USD 2.4 billion and we had almost 200 plus high quality investors coming from US, Europe and Asia.

We allocated about 47 percent to Asia and 35 percent to US and about 18 percent to Europe. These are five-year bonds with a rate of 8.875 percent, a fixed rate. Therefore, compared to London Inter-Bank Offered Rate (LIBOR) it is a very good rate for unsecured bond.

The proceeds will be used mainly to refinance our debt and bring it down. However, overall the offering has been very successful and this will open gate for many other companies from India to approach the international market and we are very glad that we could do it.

Reema: Post the money that you use for repaying debt and refinancing it, what will be the debt on the books?

A: The debt on the book will almost remain the same because this is a debt which comes over and replaces many other debts which are high cost debts or more volatile debt, so they will go away and this will be a more stable debt.

Reema: What will be the saving on the interest front? I am presuming you are refinancing the high cost debt with this?

A: Yes, there will be some saving. We believe that the cost here is about 8.8 percent and the cost otherwise is almost 11.5-12 percent, so there will be 2-3 percent saving on major portion but there will be some foreign exchange loans also which will be paid out. So, overall we believe there will be about 2 percent saving from this.

Ekta: Focusing on the defense contract that we have been talking about, about Rolta. We understand that it is a Rs 50,000 crore defence contract along with BEL. Have you heard anything concrete on the same?

A: The government is taking logical steps to take it forward but these kinds of contracts are not decided quickly. So, we are expecting a timeframe of about six-eight months by which time they will be decided. We are pleased that the progress under the new government is very fast and quick.

Ekta: How many consortiums are in the race for this, do you know that?

A: Original bids were by four consortiums but as we are go forward short listing is happening so I cannot share much on that but we believe that we are very well placed.


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