HEADLINES:
November 20 2017
Lenders to take 51% in Reliance Comm
31 October 2017

Aim to sell assets to repay ₹17,000 crore debt; Mukesh Ambani’s Jio may be interested in RCom’s assets

Promoters of the Anil Ambani-led Reliance Communications (RCom) will cede control to lenders who will own 51% stake in the debt-laden company.

Debt of ₹7,000 crore will be converted into equity. Promoter holding in RCom will decline to 26% from 59%. This comes after RCom’s talks with rival Aircel to merge its wireless business with the latter fell through.

Mukesh Ambani-led Reliance Jio is likely to bid for RCom’s assets, it is learnt.

When asked about the possibility of Reliance Jio buying out 51% stake in RCom from the joint lenders’ forum-led sale process, Puneet Garg, executive director, RCom, said, “They [Jio] don’t want to deal directly but have shown interest in bidding for many of our assets in a transparent manner.” However, he did not reveal names of interested buyers citing non-disclosure agreements. “All I can say is that if they are one of the interested parties and if they emerge as the winner, their name will be disclosed.”

A mail sent to Reliance Jio regarding its interest in buying RCom and its assets remained unanswered.

RCom’s lenders have appointed SBI Capital Markets Limited as the adviser to run a competitive process meant to monetise the assets of the company.

RCom has presented a comprehensive debt resolution plan to its domestic and foreign lenders, which envisages no loan write-offs by them.

As per the plan, the company will pay off up to ₹17,000 crore of debt, by monetising assets including spectrum, towers, fibre and media convergence nodes.

Additional debt

Besides, RCom will pay an additional ₹10,000 crore of debt out of the proceeds of sales and commercial development of Dhirubhai Ambani Knowledge City and other real estate assets across eight metros. The firm’s current outstanding debt stands at ₹45,000 crore.

After the asset sale, RCom will be left with a portfolio comprising enterprise, carrier, Internet data centre and global submarine cable networks in India and overseas. It will also have revenues and secured debt of ₹6,000 crore each.

“Debt of ₹7,000 crore is proposed to be converted into 51% of the company’s equity, as per the SDR guidelines of the RBI.

“Shareholders of the company at the AGM held on September 26 have already approved issuance of equity shares to lenders by conversion of loans,” said a company statement.

RCom is under a standstill (or moratorium) period for interest and principal repayments till December 2018 and expects to complete the SDR process as per applicable RBI guidelines.

“Mukesh Ambani is interested in buying out Reliance Communications from Anil Ambani but in a transparent manner so that he knows exactly what he is getting and for what amount,” investment advisor S.P. Tulsian told The Hindu

 

 

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