CDB provides $1.33 billion loan to Reliance Communications (Facility III) (Linked to Project ID#42654, #54348, #54350)

On March 9, 2011, Reliance Communications entered into a $1.33 billion term loan facility agreement ("Facility III") with China Development Bank (CDB) to refinance a 3G spectrum fee payment and facilitate the acquisition of equipment imports from unspecified Chinese vendors. This loan carried an interest rate of LIBOR plus a 3.25% margin, but its 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 (principal) amount outstanding under this facility was $1.237 billion. 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 in the following manner: 0.461% (6-month average LIBOR in March 2011) + 3.25% (given margin) = 3.711%. 2. This project is linked to three other CDB loans to Reliance: $750 million USD in 2008 (Facility I) (#42654), $300 million USD in 2011 (Facility II) (#54348), 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

2

Number of total sources

6