Bank of China provides $69.9 million loan to SSTL to buy ZTE equipment (Linked to Project ID#67448)

On June 29, 2009, Sistema Shyam TeleServices Limited (SSTL), a joint venture between Sistema of Russia and Shyam Group of India, entered into a buyer credit agreement (SSTL-Bank of China Agreement) with Bank of China Limited, Shenzhen Branch allowing borrowings of up to approximately $69.9 million (under security of China Export & Credit Insurance Corporation Sinosure), to facilitate investments for augmenting the nation-wide wireless infrastructure of its mobile services network in India, under the MTS brand. The loan was provided to finance telecommunication equipment supplies. As of December 31, 2011, the total amount outstanding under the credit agreement was approximately $69.6 million. The loan has a final maturity date of October 6, 2017. The agreement is for a period of eight years with three years of moratorium on principle repayment. The facilities have interest rates between 2.31-2.76% (LIBOR+ 2.31%-2.76). The company will invest the loan to source supplies from ZTE, a provider of telecommunications equipment and network services to build-out the CDMA network. The facility is guaranteed by Sistema JSFC. The loan is subject to a number of early repayment events, including change of control over the borrower. Non-compliance with covenants under the credit agreement with Bank of China Limited, Shenzhen Branch, in addition to other events, may constitute an event of default. These other events include: (i) any creditor becoming entitled to declare the debt of SSTL (and its subsidiaries) or Sistema JSFC over a certain amount due and payable as a result of an event of default; (ii) any litigation, arbitration, administrative, governmental, regulatory or other investigation, proceedings or disputes which could reasonably be expected to have a material adverse effect on the business, assets, financial condition, results of operations or prospects of SSTL or Sistema JSFC; (iii) any event or circumstance or environmental incident which are in the opinion of the lender reasonably likely to have, or result in, a material adverse effect on SSTL or Sistema; (iv) termination, expiration, renewal of an Indian telecom licence, or any circumstance subsisting which permits termination of an Indian telecom licence, which the lenders determine has or is likely to have a material adverse effect on the business, assets, financial condition, results of operations or prospects of SSTL or Sistema JSFC; (v) any expropriation, attachment, sequestration, distress or execution affecting any asset or assets of SSTL (or any of its subsidiaries), or Sistema JSFC (or any of its material subsidiaries as listed in the agreement) with a value above a certain amount; (vi) any breach of representation (which automatically repeat on each draw-down request date and on the first day of each interest period), including (without limitation) a representation that no litigation has been commenced which, if adversely determined, might reasonably be expected to have a material adverse effect on the business, assets, financial condition, results of operations or prospects of SSTL or Sistema JSFC; and (vii) any steps taken (or statement of intention to take steps) by any governmental authority with a view to the seizure, expropriation, nationalisation or acquisition of controlling stake in SSTL or assets or revenues of SSTL with a value above a certain amount. On January 14, 2016, Reliance Communications announced that it had acquired Sistema Shyam TeleServices Limited (SSTL, operating as MTS India) in an all-stock deal. In February 2019, Reliance Communications filed for bankruptcy as it was unable to sell assets to repay its debts.

Additional details

1. The proceeds of the loan were to be used by the borrower to finance projects in India and not in Russia.

Number of official sources

1

Number of total sources

6