Airtel International begins cash purchase of its USD 1.5 bn bonds to reduce debt

New Delhi: Bharti Airtel on Saturday said it will pre-pay USD 1.5 billion debt with its subsidiary Bharti Airtel International (Netherlands), using the proceeds it got from six global entities investing in its Africa unit.

Bharti Airtel International (Netherlands) B V commenced cash purchase of USD 1.5 billion, 5.125 per cent Guaranteed Senior Notes which were due in 2023, Bharti Airtel said in a regulatory filing.

This offer, it said, has been made with a view to “proactively manage its capital structure, reduce gross debt and leverage by acquiring the Notes funded out of equity proceeds and also provide liquidity to Noteholders at a premium to the market.” Bharti Airtel group continues to deleverage and pursue its strategies towards that end, it added.

“In line with this, it has been actively exploring various equity driven initiatives, including those previously announced regarding its Africa business, so as to proactively manage its balance sheet and capital structure to align them to the group’s core conservative philosophy,” it said.

Bharti Airtel International’s (Netherlands) parent Airtel Africa Ltd, a UK incorporated subsidiary of Bharti Airtel Limited, recently made a successful primary equity issuance of USD 1.25 billion to six leading global investors, including Warburg Pincus, Temasek, Singtel, SoftBank Group and others.

“The proceeds of this equity issuance are intended to be used to reduce Airtel Africa’s existing debt of approximately USD 5 billion on the date of the announcement,” it said.

The proceeds of this equity issuance are now fully realised and available as cash. The company also carries organic cash on its balance sheet.

“The company wishes to utilize the proceeds of this equity issuance and the cash available to it to reduce its existing debt by offering to purchase ‘any and all’ of the Notes pursuant to the Tender Offer.

“Via the Tender Offer, the company is also providing liquidity to the Noteholders at a specified premium over the market price at launch,” the filing said.

This offer is in addition to the previously announced tender offer cum repayment of EUR 1 billion 4 per cent notes maturing December 2018, for which funding has been drawn and available as cash with the company.

Earlier this week, Moody’s Investors Service had placed Bharti Airtel’s rating on review for downgrade on low levels of profitability and expectation of weak cash flow.

Moody’s had placed on review for downgrade the ‘Baa3’ issuer and senior unsecured rating of Bharti Airtel and the ratings on the backed senior unsecured notes issued by Bharti Airtel International (Netherlands) B V.