Vodafone Idea lenders have come out of the shell and asked the financially distressed telco to offer additional collateral and security on existing services. Not only this, but the lenders have also asked for higher interest on loans. Since Vodafone Idea’s debt is much higher than the cash reserve, even concerned banks are considering the telco’s need for additional bank guarantees. As reported by ET Telecom, the lenders of Vodafone Idea are stressed from the recent downgrade rating of the telco. Nearly all the lenders are seeking the highest interest rates along with top-up on margin money and security against services.
Vodafone Idea has Bagged Nearly Rs 25,000 Crore from Public Sector Banks
The cash-strapped telco recently moved to the Supreme Court and revealed that it has outstanding utilised facilities of about Rs 47,000 crores from banks, non-banking financial, mutual funds above its arrears to the DoT. The outstanding amount also includes Rs 25,000 crore from public sector banks. Vodafone Idea is already turning to its lenders to provide additional bank guarantees worth Rs 980 crores to avail moratorium on spectrum payment.
Back in June, Vodafone Idea moved to DoT, asking for an extension on the moratorium period. It is also speculated that the relief package on which the government is working will include a moratorium on payment. Lenders, on the other side, have stated that converting debt into equity is one of the options which would aid them. In case you are not aware, the State Bank of India has an exposure of around Rs 11,000 crore to the telco.
Capital Raise or Government Relief Package is Crucial For Vodafone Idea
Vodafone Idea has been working extensively towards getting Rs 25,000 crore from funding projects. However, the deals are still floating, and no official agreement has been made to date. Recently CARE Ratings downgraded the telco to B-minus and kept it under credit watch with negative implications. Motilal Oswal issued a note and marked that a capital raise round or government relief package will be two major events that will provide immediate liquid support to the financially distressed telco, which has a whopping debt of nearly Rs 1.9 lakh crore.