Friday, August 3, 2012

Largest Indian Restructuring Nears End


Fri., August 3, 2012
A light is shining at the end of the tunnel for Indian telecom tower company GTL Infrastructure. After a drawn-out restructuring process, GTL is close to finalizing a cashless exchange offer with holders of its US$228.3m foreign currency convertible bonds, Reuters reported on an International Financing Review story. Bondholders have approved a restructuring proposal tabled by GTL's advisers Houlihan Lokey and Avista Advisory, leaving a resolution likely before mid-September if the Reserve Bank of India approves it. RBI approval would bring one of the largest restructuring processes ever conducted by an Indian company close to completion, coming after the GTL group restructured loans totaling about Rs140bn (US$2.7bn) late last year. It may also offer a template for the many other Indian companies that are struggling to repay or refinance outstanding US dollar convertible bonds - especially in the face of slowing economic growth and a 25% slump in the rupee against the dollar over the past 12 months. GTL Infrastructure's zero coupon CBs have an outstanding face value of US$228.3m. Issued at par, they redeem at 140.4 in November 2012. The bonds are convertible into shares at Rs53.04, but those options are well out of the money. GTL Infrastructure's share price was just Rs8.10 on Wednesday. According to market sources, under the new proposal, about US$228.3m of the bonds would be exchanged at par into a new set of five-year convertible bonds that pay a coupon of six-month Libor plus 500bp. The conversion price is yet to be fixed, because the shares are quoted below face value, but the deal offers bondholders a solution that does not require a haircut to their principal. Bondholders would also be offered equity to pay for the difference between the par issue price and the redemption price of the old bonds. A portion of the restructured CBs will be compulsorily convertible into equity, and a portion optionally convertible over the life of the bond. Once the RBI grants its approval, the next step would be the appointment of a bookrunner to run the cashless exchange offer.

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