Reliance abandons IPO for FLAG submarine cable unit

Unfavorable market conditions continue to make sale a challenge
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India's Reliance Communications (NSE: RCOM) has decided not to pursue an initial public offering of its FLAG submarine cable unit due to what it says are "unfavorable" market conditions. 

Carrying $7 billion in debt, the service provider hoped to generate between $700 million and $1 billion from the listing of FLAG via GTI Trust, a Singapore-based trust, on the Singapore stock exchange.

Under the initial plan, Reliance wanted to divest a 75 percent stake in the submarine cabling business.

The service provider said in a statement on Friday that it would "await supportive market conditions and easing of prevailing global uncertainties to proceed with the offering / listing at an appropriate time in the future."

Although GTI Trust was offering a dividend yield of as much as 11.5 percent and Reliance extended the book-building period twice last week, neither effort was enough to attract investor interest.

Reliance's efforts to sell off the FLAG assets, which it purchased in 2003, have been an ongoing struggle. Since 2008, the service provider has been trying to sell the unit, but ongoing global economic issues drove it to abandon those plans.

For more:
- Reuters has this article
- see Reliance's statement (.pdf)

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