reuters
Mumbai, Dec 26: Reliance Communications Ltd Tuesday outlined a plan to cut its debt by Rs390 billion underpinned by the sale of assets for which some non-binding offers had already been made.
The plan, which sent the company’s shares soaring, expands on one it announced in late October. Reliance Communications (RCom) said Tuesday it would involve no write-offs to lenders or bondholders, nor conversion of debt to equity. The firm will exit the “strategic debt restructuring” process that allows lenders to conduct takeovers by swapping loans for equity, Anil Ambani, the businessman backing the company, told a news conference Tuesday.
Foreign lenders have supported the plan, and RCom has received non-binding offers for some of assets, through whose sales it hoped to raise about Rs250 billion by March, he added.
The announcement sent the company’s shares up to almost 40 per cent, and marks its latest attempt to remove a big cloud hanging over what was once the flagship of Ambani’s business empire but has been hit with concerns about its ability to repay its debt after failing to pay interest on some of it.
Rising competition in India’s telecom sector, including the entry of start-up Jio – backed by Anil Ambani’s brother Mukesh – has trimmed margins in India’s telecom sector to wafer-thin levels.
Competing in it would require “a pipeline into the Reserve Bank of India’s printing press,” Anil Ambani said at a news briefing in Mumbai.
“It is a guzzler of currency . . . It has engulfed many, many people and many many companies.”
RCom had net debt of Rs450 billion at the end of October, according to a slide presented Tuesday, putting it among India’s most indebted companies.
