Moumita Bakshi Chatterjee

New Delhi, Sept. 28 HCL Technologies, which rivaled Infosys’ bid for Axon Group, has tied up the £400-million loan component to fund its offer, at an attractive interest rate of about 6.5 per cent per annum, based on the current dollar LIBOR rate.

According to sources, the borrowing has been structured in such a way that the loan attracts a dollar LIBOR instead of pound.

“The loan carries an option for HCL Technologies to draw down in equivalent of dollars. This is a commercially evaluated decision. Given the borrowing cost of 6.5 per cent per annum compared to our treasury yield of about 10 per cent on our own funds, it becomes clear as to why HCL Technologies decided to maximise loan component for funding the acquisition,” sources pointed out.

Last week, HCL Technologies announced a cash offer of 650 pence a share for the UK-based SAP consulting company valuing it at £441.1 million, over eight per cent higher than a rival £407 million offer made by Bangalore-based Infosys Technologies.

HCL has inked an ‘inducement fee contract’ with Axon, which entitles it to get one per cent of the bid amount if it failed to acquire the consultancy firm..

Related Stories:
HCL Tech offers £441 m for UK’s Axon, tops Infosys’ bid
Offer price for Axon fair: CEO
Infosys buys UK-based Axon group for £407 m

(This article was published in the Business Line print edition dated September 29, 2008)
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