Reliance Communications lenders have placed the cash-strained telecom company under a strategic debt restructuring exercise. Rcom has debts of over £4.57 billion on its books and intends to reduce it by £2.50 billion through a merger of its mobile services units with Aircel and a sale of its interest in the telecom tower business to Canada's Brookfield. Its current market capitalisation is £513.9 million.
Chairman Anil Ambani said, “We met the lenders and presented our plan for strategic transformation and I am happy to report that our plan has been accepted by them.”He added that creditors have given the company time till end of December to seal the two transactions which would reduce RCom's debt by 60 per cent. “This will be the largest ever debt reduction by a company in the history of India.”
Ambani said the Aircel and Brookfield deals is expected to be concluded well before the deadline, adding that a joint forum of the lenders have taken note of the substantial progress made by the company. The 57 year old sought to assuage investors and lenders' concerns after credit rating agencies downgraded RCom's bonds and the company delayed loan repayments to more than a dozen banks.
SDR is a debt recovery programme under which lenders convert debt to equity and sell the business to new owners. Reserve Bank of India rules require that banks get control of at least 51 per cent shares in the company through debt conversion and sell the business within 18 months of initiation of SDR. Stocks of the telecom company crashed in recent days, over worries whether the company will be able to clear its debt obligations. RCom posted its highest ever quarterly loss of £96.6 million in the three-month period ended March 31 of 2016-17.
