Anil Ambani looks to remain major shareholder

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 on 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, Ambani will swap about two-thirds of his 66 per cent stake
in Reliance Communications for shares in MTN and retain a stake of
20-25 per cent 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 per cent, 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 per cent
stake to ensure that he would remain the biggest individual
shareholder in the company after MTN.

"If 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 per cent 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 per cent.

"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.

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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