CDB provides $300 million loan to Reliance Communications (Facility II) to repay debts and modernize equipment (Linked to Project ID #42654, #54349, #54350)
Commitment amount
$ 368964054.4023832
Adjusted commitment amount
$ 368964054.4
Constant 2021 USD
Summary
Funding agency [Type]
China Development Bank (CDB) [State-owned Policy Bank]
Recipient
India
Sector
Communications (Code: 220)
Flow type
Loan
Level of public liability
Private debt
Financial distress
Yes
Infrastructure
No
Category
Project lifecycle
Geography
Description
On March 9, 2011, China Development Bank (CDB) provided a $300 million loan ("Facility II") to Reliance Communications to help modernize its equipment and payoff maturing loans. This loan carried an interest rate of LIBOR plus a 2.20% margin, but the maturity and grace period are unknown. It was secured by (i.e. collateralized against) (1) a first pari passu charge over the present and future moveable plant and machinery and capital work in progress of, and all rights, title, interest, benefits, claims and demands under and in respect of all insurance contracts entered into in relation to these assets by Reliance Communications Limited, Reliance Communications Infrastructure Limited, Reliance Infratel Limited and Reliance Telecom Limited; (2) assignment of 20 unified access service licenses, a national long-distance license and an international long-distance license of Reliance Communications Limited; and (3) pledge of: (i) 66,980,095 equity shares of Reliance Telecom Limited held by Reliance Communications Limited; (ii) 18,019,900 equity shares of Reliance Telecom Limited held by Reliance Infocomm Infrastructure Limited; and (iii) 9,379,999,994 equity shares of Reliance Communications Infrastructure Limited held by Reliance Communications Limited. As of December 31, 2014, the u(principal) amount outstanding under this loan facility was $29 million. In February 2019, Reliance Communications filed for bankruptcy as it was unable to sell assets to repay its debts.
Additional details
1. AidData has estimated the all-in interest rate as follows: 0.461% (6-month average LIBOR in March 2011) + 2.20% (given margin) = 2.661%. 2. This project is linked to three other CDB loans to Reliance: $750 million USD in 2008 (Facility I) (#42654), $1.33 billion in in 2011 (Facility III) (#54349), and $300 million USD in 2011 (Facility IV) (#54350). All of these loans were probably used to stave off bankruptcy. Many creditors, including the CDB, are now suing the Reliance Communications to recover unpaid debts.
Number of official sources
1
Number of total sources
5
Details
Cofinanced
No
Direct receiving agencies [Type]
Reliance Communications Ltd. [Private Sector]
Implementing agencies [Type]
Reliance Communications Ltd. [Private Sector]
Collateral
(1) a first pari passu charge over the present and future moveable plant and machinery and capital work in progress of, and all rights, title, interest, benefits, claims and demands under and in respect of all insurance contracts entered into in relation to these assets by Reliance Communications Limited, Reliance Communications Infrastructure Limited, Reliance Infratel Limited and Reliance Telecom Limited; (2) assignment of 20 unified access service licenses, a national long-distance license and an international long-distance license of Reliance Communications Limited; and (3) pledge of: (i) 66,980,095 equity shares of Reliance Telecom Limited held by Reliance Communications Limited; (ii) 18,019,900 equity shares of Reliance Telecom Limited held by Reliance Infocomm Infrastructure Limited; and (iii) 9,379,999,994 equity shares of Reliance Communications Infrastructure Limited held by Reliance Communications Limited.
Loan Details
Interest rate
2.661%