News: Ruias corral stunning $25bn credit line
(DNA 02/01/2006) Mumbai - The Ruia Brothers of the Essar Group is going for a biggie indeed. Foreign media reports on Monday said they have lined up pledges for an eye-popping $20 to $25 billion from a slew of investment banks.
The group, with a collective networth of $15 billion comprising a bulk of its telecom assets, wouldn’t need so much though, as it already owns 33% of the trophy firm Hutch-Essar.
A Financial Times report said on Tuesday Essar has received comfort letters from as Morgan Stanley, Standard Chartered Plc, Lehman Brothers Holdings Inc and Citigroup to arrange for the funds.
Sources at Essar declined to be quoted, saying the group is still in the process of organising the lead consortium and in all probability a few more banks are expected to join to help it mount the offer for buying out the Hong Kong billionaire Li Ka-shing’s stake in Hutch Essar.
On the flip side, the Ruia brothers are comforted by the fact that even if they lose the bid, they are bound to win.
This is because, the Essar group’s 33% stake will fetch them rich valuations from investors winning the bidding war.
For the moment though, the Ruias are busy lining up a huge tranche for making what is the most audacious bid ever in the history of Indian M&A.
“Our cards are open. We have an option to buy out, sell out or stay with the existing partner,” an Essar source said.
“It’s for Li Ka-shing’s Hutchison Telecom International to decide on the future course. Needless to mention, we have the right of first refusal,” the source added.
The net assets of the Essar Group are in the region of $6 billion, while its turnover excluding Hutch Essar is pegged at a more modest $3 billion.
And this is the very reason for the group to prepare for the eventuality of stake sale by Li Ka-shing.
When the shrewd Hong Kong tycoon gets the bid approach, the Ruias hope to be ready with their own counter.
“So far, Hutchison has not given any feelers or made its intentions public,” reveal Essar group sources.
The group, with a collective networth of $15 billion comprising a bulk of its telecom assets, wouldn’t need so much though, as it already owns 33% of the trophy firm Hutch-Essar.
A Financial Times report said on Tuesday Essar has received comfort letters from as Morgan Stanley, Standard Chartered Plc, Lehman Brothers Holdings Inc and Citigroup to arrange for the funds.
Sources at Essar declined to be quoted, saying the group is still in the process of organising the lead consortium and in all probability a few more banks are expected to join to help it mount the offer for buying out the Hong Kong billionaire Li Ka-shing’s stake in Hutch Essar.
On the flip side, the Ruia brothers are comforted by the fact that even if they lose the bid, they are bound to win.
This is because, the Essar group’s 33% stake will fetch them rich valuations from investors winning the bidding war.
For the moment though, the Ruias are busy lining up a huge tranche for making what is the most audacious bid ever in the history of Indian M&A.
“Our cards are open. We have an option to buy out, sell out or stay with the existing partner,” an Essar source said.
“It’s for Li Ka-shing’s Hutchison Telecom International to decide on the future course. Needless to mention, we have the right of first refusal,” the source added.
The net assets of the Essar Group are in the region of $6 billion, while its turnover excluding Hutch Essar is pegged at a more modest $3 billion.
And this is the very reason for the group to prepare for the eventuality of stake sale by Li Ka-shing.
When the shrewd Hong Kong tycoon gets the bid approach, the Ruias hope to be ready with their own counter.
“So far, Hutchison has not given any feelers or made its intentions public,” reveal Essar group sources.
posted by InCar Group Press Room at 23:19
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