Reliance Successfully Completes Debt Financing

[Vishal Gupta 4]

Reliance Infocomm successfully completes debt financing of US $2.2 billion

US Exim and Export Development Canada commit US $750 million facilities arranged by Citigroup

=>Direct exposure on Reliance Infocomm's balance sheet

DAKC (Dhirubhai Ambani Knowledge City), Navi Mumbai, December 25, 2004

Reliance Infocomm Ltd. (RIC), The Export Import Bank of the United States of America (Ex-Im Bank), Export Development Canada (EDC) and Citigroup signed financing facilities of US$ 750 million for supporting RIC's telecom project in India. This marks the closure of RIC's total debt financing of US $ 2.2 billion.

The financing consists of US $ 500 million of Ex-Im Bank guaranteed loan and US $ 250 million of EDC loan and has a total repayment tenor of 10 years after a one and a half year build out period of the telecom network. These facilities were arranged by Citigroup.

This debt will finance the expansion of Reliance Infocomm's mobile network to over 5000 towns and cities as well as the roll out of its broadband services.

Jagannatha Kumar, Head, Project Finance, Reliance Infocomm explains, "This deal provides the Company extremely attractive long tenor funding. It demonstrates US and Canadian supplier support to the Company, and the strong relationship that we have built with export credit agencies such as Ex-Im Bank and EDC. The deal is an endorsement of our business plan and a recognition by international agencies of the Company's achievements".

Sanjay Nayar, Country Head, Citigroup, India says "This represents a landmark transaction in India's fast growing telecommunication sector, in terms of, both size and structure. It provides significant financial flexibility to Reliance Infocomm, by adding a new dimension to their debt financing alternatives.

About Reliance Infocomm

Reliance Infocomm Ltd., a Reliance group company, is India's largest mobile service provider with over 9 million customers. Reliance Infocomm has established a pan-India, high capacity, integrated (wireless and wire-line) and convergent (voice, data and video) digital network, to offer services spanning the entire Infocomm value chain - infrastructure, services for enterprises and individuals, applications and consulting. The Reliance Group, founded by Shri Dhirubhai H. Ambani (1932-2002), is India's largest business house with total revenues of over Rs 99,000 crore (US$ 22.6 billion), cash profit of Rs 12,500 crore (US$ 2.8 billion), net profit of Rs 6,200 crore (US$ 1.4 billion) and exports of Rs 15,900 crore (US$ 3.6 billion).

About Citigroup India

Citigroup India is a member company of Citigroup, the largest and the most diversified provider of financial services in the world. In India, with over a 102-year history and a network of 31 branches, Citibank has come to be acknowledged as one of the leading international banks in the country with a track record of outstanding business milestones. Cash Management was pioneered by Citibank in 1986 and is utilised by over 900 corporates, with through puts totaling around $ 25 billion (6% of India's GDP). It is India's largest foreign bank in the FX (foreign exchange) market with an 8% market share. As the leading custodian, Citibank has over $ 15 billion of custody assets under management. Citibank was a pioneer in consumer banking, being the first to introduce focused consumer lending programs and a pioneer in electronic banking, having made significant investments in technology. Citibank was the first to launch credit cards in India and is the leading credit card issuer in the country with over 2.5 million card members.

Backgrounder

Reliance Infocomm (RIC) debt closure information

RIC has tied up total debt of US$ 2.2 Billion (close to Rs 10,000 crores), comprising international debt of US$1.05 billion from Export Credit Agencies (ECAs) and various offshore banks and balance from domestic banks (about Rs 5000 crores), to meet the debt requirement of RIC's project. The entire debt, including the facilities from ECAs, is structured entirely on the basis of RIC's operating and financial strengths and its business potential. The amount of US$ 1.05 Billion of international debt raised by RIC in a short span of less than six months is the largest in Indian corporate history.

Ex-Im Bank, the official U.S. export credit agency, is in its 71st year of helping finance the sale of U.S. exports, primarily to emerging markets, by providing loan guarantees, export credit insurance, and direct loans. In fiscal year 2003, the Bank authorized financing to support $14.3 billion of U.S. exports.

The financing of US $ 500 million US EXIM facility is the largest for any infrastructure project in India. Ex-Im Bank had $967 million in exposure in India prior to this transaction in various sectors. The Ex-Im facility supports financing of imports from various suppliers in USA. This facility is in the nature of a guarantee. Based on this guarantee, GOVCO (Citigroup SPV) will be lending to RIC.

EDC provides trade finance and risk management services to Canadian exporters and investors in up to 200 markets. Founded in 1944, EDC is a Crown corporation that operates on commercial principles.

The EDC facility of US$ 250 million is the largest private sector transaction that EDC has done in India to date. EDC's facility is in the form of a direct loan to RIC.