MTNL plans bonds to raise Rs 978 cr

NEW DELHI, AUG 1: Mahanagar Telephone Nigam Ltd (MTNL) plans to raise Rs 978 crore through private placement of bonds in the domestic market during the next quarter. The money will be raised through private placement to financial institutions, mutual funds, banks and trusts, MTNL sources said.This route is cheaper than the public issue as in the public issue the cost of raising money increases by about two per cent for the government in the form of service cost, the sources said.

A high-level committee had been appointed by MTNL to work out details of the issue and the decision to raise money through private placement of bonds would be communicated to the government by the committee, they added.Asked about the interest rate to be offered by MTNL, the sources said that no final decision had been taken so far and added that MTNL would like to set a bench mark for the bond issue.

MTNL board had already given its approval to raise funds for network expansion, the sources said adding that the offer wasexpected to be made after September. According to sources, MTNL was in a position to raise funds in the market and at a very attractive rate of interest. The committee was looking into the modus operandi of the issue and would give recommendations soon.

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On the issue of offering 200 shares each to the MTNL employees, the sources said that the company would try to get the best deal for its employees as the shares go in lock-in period for three years.

The discount on shares could be as high as 50 per cent or more to the market price along with an option to finance the purchase of shares.