Norway’s Telenor has settled Uninor’s debts amounting to Rs 9,809 crore. This comes after the banks declined to extend the tenure of the loan.
Uninor said in a statement that “One of Uninor’s shareholders has repeatedly refused to fund the company through its own funds and has also actively worked to stop the majority shareholder from doing so. In the absence of a rights offer, Uninor has relied on short-term loans from Indian and international banks that were fully guaranteed by Telenor Group.” .
“Consequently, fulfilling its guarantees, Telenor Group has directly settled all of Uninor’s loans amounting to Rs. 9,809 crore with the respective banks. This allows Uninor to continue its current operations.”
Guarantees honoured
This amount will now reflect as a liability on Uninor’s books, with Telenor Group as a creditor. The Nordic firm said that it may enforce its claim to the extent of this sum on Uninor. However, since this is not a commercial borrowing, Telenor is not permitted to charge any interest.
“This is not refinancing, nor is Telenor Group permitted to charge any interest towards this amount. This is an inward remittance to the banks, and not to Uninor, triggered by the banks invoking the Telenor Group guarantees. This process is in line with the regulations,” the company clarified.
Telenor has been looking at multiple options, including a rights issue but Unitech has blocked these attempts. Unitech is in favour of raising short-term loans instead of a rights issue. The real-estate major, which owns just over 33 per cent in Uninor, had made it clear that it would not participate if Telenor went ahead with the rights issue. The two companies are fighting it out in the Company Law Board.
The Nordic company had also sought one-time relaxation in the external commercial borrowing (ECB) norms for giving a loan of up to $2 billion to its cash-strapped Indian venture. This process is still underway.
ECB rOUTE
Telenor said that it wanted to go the ECB route so that Uninor can raise borrowing directly from Telenor Group for its operations since no loans are available to Uninor from Indian banks nor is the company able to raise equity funding from its shareholders owing to Unitech Ltd blocking the rights offer.