Reliance Comm ties up loans to refinance $1.18 bln fx bonds

REUTERS - Reliance Communications said on Tuesday it has secured loans from a host of Chinese banks to refinance $1.18 billion worth of outstanding foreign currency bonds due for redemption on March 1.

The deal will provide respite to the No. 2 Indian mobile operator by subscribers, controlled by billionaire Anil Ambani, that has been trying for more than a year to sell its telecoms tower unit to cut the company's about $6.5 billion debt.

Reliance Comm said Industrial and Commercial Bank of China <601398.SS>, China Development Bank Corp , Export Import Bank of China and other banks were funding the refinancing of the outstanding foreign currency convertible bonds (FCCBs).

The company said it would benefit from extended loan maturity of seven years and "attractive" interest cost of about 5 percent, sending its shares up as much as 5.7 percent in a Mumbai market that rose 1.5 percent.

The FCCBs were issued in February 2007 when the Indian markets were booming, with a conversion price of 654 rupees a share. Cut-throat competition among India's mobile phone operators has since hit earnings and shares have plunged.

Reliance Comm shares were trading around 90 rupees on Tuesday, a fraction of the conversion price.

A source told Reuters last week Reliance Comm was in talks with China Development Bank for a syndicated loan to redeem the bond.

China Development Bank arranged loans worth $1.93 billion for Reliance Comm last March, which the company used to finance radio airwaves it acquired during a costly 3G auction, as well as for the purchase of equipment.

With its bruising debt load and a ferociously competitive 15-operator market, Reliance Comm has reported eight straight quarters of falling profits.

The company is in talks with U.S. buyout giants Carlyle Group and Blackstone Group on a deal for the towers business which could be worth more than $3 billion, sources have said, but a deal is not close to completion.

Reliance Comm is looking to secure a leasing agreement for its towers from Reliance Industries , controlled by Anil Ambani's once-estranged brother Mukesh, before pressing forward with a tower sale, the sources said.

(Reporting by Devidutta Tripathy in NEW DELHI; Editing by Ranjit Gangadharan)