The telecom operator has a debt exposure of Rs 450 bn to its lenders, with close to 60-65% of the exposure lying with foreign banks.
MUMBAI : Debt-laden Reliance Communications Ltd has received a seven-month ‘standstill’ on repayment of its 450-bn-rupee debt from lenders, under the strategic debt restructuring plan.
This was decided at the first meeting of the joint lenders’ forum led by the State Bank of India on Friday, implying that the company has 210 days to pare its debt.”The company will not convert debt into equity during the moratorium period,” Chairman Anil Ambani said at a press conference here on Friday.
The company aims to resume making interest payments from January after cutting debt to 200 bn rupees, as lenders have agreed to give the company time till December to complete the sale of its tower business to Brookfield Asset Management and complete the merger with Aircel Ltd, report Cogencis.
Reliance Communications has not sought any renegotiation of the terms of the 200-bn-rupee-odd debt that it will be left with, post repayment of 250 bn rupees, Ambani said.
The telecom operator has a debt exposure of 450 bn rupees to its lenders, with close to 60-65% of the exposure lying with foreign banks. The company aims to develop a “conservative debt profile” after the debt is cut to 200 bn rupees, he said.
This will be achieved by looking at further “monetisation”, or sale of its stake in its various global businesses, including the remaining 49% stake in the tower company, Ambani said. RComm also said it may look at sale of its direct-to-home operations and some of its premium land to further reduce debt.Shares of the company came under severe stress, falling 40% in the past two weeks, after a media report said the telecom major had defaulted on its interest payments to at least 10 domestic banks and delayed their coupon payment on domestic bonds.
Shares of RComm ended down 0.5% at 20.65 rupees on the National Stock Exchange on Friday. News of the moratorium is expected to lift the company’s 6.50% 2020 dollar bonds, said a bond dealer.
“We can see a pullback to 80-85 cents (to a dollar, from 65-70 cents today),” a bond dealer said. Over the past month, four credit rating agencies, including Fitch Ratings and Moody’s Investors Service, have downgraded the company’s debt instruments. RComm will work to restore its credit ratings at the earliest, Ambani said.
