Ambani looks to remain major shareholder in RCom, MTN

London, June 12 (PTI) Indian billionaire Anil Ambani
hopes to remain a major shareholder in his flagship firm
Reliance Communications and South Africa-based MTN after the
two companies merge, a media report Thursday said.

The Financial Times reported that Ambani hopes to be a
major shareholder in RCom and MTN after the firms combine in a
reverse takeover.

Quoting people familiar with the deal, the newspaper
said, "under the proposals, Mr Ambani will swap about
two-thirds of his 66 percent stake in Reliance Communications
for shares in MTN and retain a stake of 20-25 percent in the
Indian cellular carrier."

Ambani would pay an extra four to five billion dollars in
cash to bring his stake in MTN to his target level of 34.9
percent, the ceiling beyond which he would be forced to make a
general offer for MTN, the newspaper said in an article
published in its online edition.

According to Financial Times, the cash amount would be
raised through debt or by enlisting the help of private equity
investors or a combination of both, although the private
equity portion would not be expected to exceed two to three
billion dollars.

He continues to remain extremely bullish about Reliance
Communications prospects and would like to remain present
there while getting a bigger piece of the action in MTN," the
report said quoting an insider.

Last month, both companies had entered into "exclusivity
talks" for a period of 45 days to explore the possibility of a
merger.

"Both parties are expected to complete due diligence
within a week, with an announcement on any deal expected early
next month," the newspaper said.

The deal between RCom and MTN would create one of the
largest mobile operator in the emerging markets with about 115
million subscribers spread across India, Africa and the Middle
East.

Under the reverse takeover proposal, RCom, would be taken
over and become a subsidiary of MTN, but through the share
swap Ambani would become by far the biggest shareholder in the
South African company, the report added.

Financial Times pointed out that Ambani is reluctant to
surrender all of his exposure to RCom and is seeking to keep
the 20-25 percent stake to ensure that he would remain the
biggest individual shareholder in the company after MTN.

"If Mr Ambani's proposal to hold large stakes in both
companies is accepted by MTN, the South African operator would
end up with a stake of about 51 percent in Reliance," the
report said.

The newspaper further added that Ambani has appointed
HSBC and Barclays to lead the debt financing for his proposal
to use cash to top up his stake in MTN beyond that achieved by
the share swap to his target of 34.9 percent.

"The move comes amid speculation that Mr Ambani is
angling to retain a senior position in Reliance
Communications, where he is currently chairman, while also
becoming the chairman or co-chairman of MTN," the newspaper
added.

Ambani is also being advised by Deutsche Bank on raising
private equity financing for his bid. Further, Lehman Brothers
and Lazard are also advising Ambani.

MTN is being advised by Merrill Lynch and Deutsche Bank.