Reliance Communications Ltd has set an indicative price range for the Singapore initial public offering of its undersea cable unit that could raise as much as USD 1 billion and help the parent reduce its debt load, IFR Asia reported on Monday.
Reliance Communications, controlled by billionaire Anil Ambani, is looking to raise funds to ease a debt load of USD 7 billion as of March. It has been unsuccessful in several past attempts to raise money by selling assets.
Global Telecommunications Infrastructure Trust (GTI Trust), which is structured as an business trust, plans to sell between 642.2 million and 757.6 million units at a price range of USD 1.09 to USD 1.32 a unit, IFR said. This translates to a distribution yield of 9.5% to 11.5% for 2013.
The yield range offered by Reliance Communications is higher than the 8.5% estimate for 2013 for Singapore-listed Hutchison Port Trust , which owns port assets in China.
The size of the base offering ranges from USD 700 million to USD 1 billion, according to an offer document seen by IFR, a Reuters publication. The trust would have a market capitalisation of USD 1.268 billion to USD 1.535 billion.
The business, which operates one of the world's largest private undersea cable networks, generated revenue of USD 267.5 million on a pro forma basis for the year ended March 2012, according to the preliminary prospectus. Reliance Communications expects the unit's revenue to rise to USD 287.6 million in fiscal 2013 and USD 308.8 million in fiscal 2014.
Reliance Communications expects the unit's loss to narrow to USD 14.4 million in the current financial year from about a USD 23 million pro forma loss in the previous fiscal year.
The stake of sponsor Reliance Globalcom, a wholly owned subsidiary of Reliance Communications, will be between 25 and 37% after theissue.
The offer opens on Monday and will close on July 16. Listing is targeted for July 23 and the listing currency is US dollars.
Deutsche Bank , Standard Chartered , Singapore's DBS and Industrial and Commercial Bank of China are the advisers for the public offering.
Officials at Reliance and Deutsche Bank declined to comment.
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