According to sources, a consortium of banks led by SBI has provided in principle clearance for these funds.
Vodafone Idea has received lender’s in-principal permission for ₹14,000 crore from a consortium of banks led by State Bank of India. According to sources, a consortium of various PSU banks and two large private sector banks has given preliminary permission for these funds.
Earlier this year, Vodafone Idea informed shareholders that it will raise an extra ₹25,000 crore from lenders. Vodafone successfully raised ₹18,000 crore through a follow-on public offering (FPO) in April.
According to a highly placed source, the finance has been extended with stringent covenants and is priced to reflect potential risks. This indicates that the interest rate on the credit granted is anywhere between 100 and 150 basis points more than what is typically seen for similar loans.
These cash will be utilized mostly for the telco’s 5G deployment. During the FPO, Vodafone Idea stated in its red herring prospectus that any cash raised from the FPO, as well as from lenders and promoters, would be used for network expansion, with impending dues being paid from the telco’s profits.
This arrangement was mostly in the works immediately after Vodafone Idea declared a successful FPO. On May 17, Akshay Moondra informed investors that banks were awaiting an equity fundraise before issuing loans.
“…We’ve been working with the banks for a long time, and they asked that the equity raising be completed first, which we have done.” During the results call, Moondra stated that they have resumed engagement with banks, have some available capital, and expect to complete the discussions in a timely manner.
Vi has reduced bank debt from ₹40,000 crore to roughly ₹4,000 crore. The business has urged lenders to disburse money corresponding with the equity infusion through the ₹18,000 crore follow-on public offering (FPO) in April this year. The FPO was oversubscribed more than six times, attracting investors including GQG Partners and Citigroup Global.
On May 8, Vi’s shareholders approved an equity infusion of ₹2,075 crore on a preferential basis from an Aditya Birla Group (ABG) entity. This, coupled with the preferential equity raise of ₹494 crore in 2022 from Vodafone Group and ABG takes the total fund infusion by both the promoter groups to ₹7,000 crore between March 2022 and May 2024.
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