Baker amp Mckenzie JSA and Khaitan help close China Development Bank and Aircel deal

Aircel has raised Rs. 3,150 crore ($700 million) from China Development Bank (CDB) as External Commercial Borrowings (ECB) to the telecom company. The ECB has been divided into two loans of Rs. 1,575 crore ($350 million) each. The ECB has been raised to pay the Chinese suppliers for the equipments purchased for expansion of the company..Aircel’s expansion deal is the biggest telecom project financing in India till date. It is also the largest pan-India mobile network expansion, covering eight new coverage circles and increased capacity in ten legacy circles..Khaitan advised the China Development Bank. In a statement by the firm, Partner Upendra Joshi said, “The Obligors (consisting of Aircel Limited, Aircel Cellular Limited and Dishnet Wireless Limited) had already entered into a Rupee Loan Facility Agreement with domestic lenders. However, the disbursement of the loan was pending security creation. In the interim, the Obligors sought to avail the ECB for $700 million, on the basis of same set of securities as had been offered to the domestic lenders. In light of the above and the fact that the telecom license of the Obligors could be assigned in favour of a domestic lender only, it was imperative that both the ECB lender and domestic lenders appoint a common security trustee and further required that CDB and the domestic lenders enter into an inter-creditor agreement. This advice was accepted by both the domestic lenders and CDB and the security documents, the inter creditor agreement and the trust and retention account agreement was accordingly drafted.”.Partners Ravi Kulkarni and Joy Jacob along with Associate Gian Singh joined Partner Upendra Singh in advising the Chinese Bank..Baker & Mckenzie was the international legal counsel for Aircel along with J. Sagar Associates acting as their domestic legal counsel with Banking and Finance Partner Divyanshu Pandey taking the lead..According to Moneycontrol, Aircel is on a Rs. 17,000 crore ($3.7 billion) expansion plan and reports that it will pay Libor plus 350 basis points for this ECB..In the recent past, there have been an increasing number of telecom companies who are using the ECB route to raise money, the most recent example being Reliance’s foray into the broadband world..Follow Bar and Bench channel on WhatsAppDownload the Bar and Bench Mobile app for instant access to the latest legal news.

Baker amp Mckenzie JSA and Khaitan help close China Development Bank and Aircel deal

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