Reliance Communications announces debt revival plan, ropes in new investor

Anil Ambani said that the company will exit the strategic debt restructuring (SDR) framework of the Reserve Bank of India (RBI) with a zero write-off to lenders and bankers.

Anil Ambani, chairman of Reliance Communication in Mumbai on Tuesday. (Express Photo: Janak Rathod)

Reliance Communications (RCom), part of the Anil Ambani group, on Tuesday announced yet another debt revival plan which it claimed will lead to full resolution of its debt by March 2018.

At a press conference in Mumbai on Tuesday, Anil Ambani said that the company will exit the strategic debt restructuring (SDR) framework of the Reserve Bank of India (RBI) with a zero write-off to lenders and bankers.

RCom has over Rs 45,000 crore of debt. Of this, Rs 25,000 crore is domestic debt and remaining Rs 20,000 crore is in the form of foreign loans and bonds.

Under the new plan, RCom claimed that it will reduce its debt by monetising the assets of its wireless business and no part of the debt will be converted into equity. The firm also indicated that a strategic investor will come on-board but did not name the new investor.

Ambani said that the new plan has the support of RCom’s lender — China Development Bank, which had dragged the telecom firm to the National Company Law Tribunal for dues running into $1.8 billion. He also said that the new resolution plan will help RCom bring down its debt by Rs 39,000 crore.

“Upon completion of all transactions as announced, the balance debt in RCom is expected to be ~ Rs.6,000 crore only, representing reduction of over 85 per cent of total debt,” said RCom in a statement.

Ambani claimed the plan involves an eight-stage asset monetisation process under an oversight committee headed by former RBI deputy governor S S Mundra with members from Trai and the entire process will be completed in 40 days.

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The proceeds from asset monetisation will be used only to pay back the lenders, including China Development Bank with whom the company has sealed an out-of court settlement.

On the no hair-cut for lenders, Ambani said the new plan involves zero equity conversion for lenders and bond holders. The debt resolution also involves part transfer of spectrum installments.

Earlier in November, RCom had presented what it called a ‘no-loan write-off’ plan where lenders are to convert Rs 7,000 crore of debt into equity. The ‘no-loan write-off’ plan also involved repaying of up to Rs 17,000 crore loans out of proceeds from monetisation of spectrum, tower and fibre assets.

Shares of RCom surged as much as 41.1 per cent to the day’s high of Rs 23.2 on NSE while the stock rose 41.02 per cent to hit a day’s high of Rs 23 on BSE. Market cap rose Rs 1,388.30 crore, or about 30.8 per cent on Tuesday. At closing price, its market cap was Rs 5,898.88 crore.