A fortnight after the merger deal between embattled Reliance Communications and Canada-based asset management firm Brookfield collapsed, the Anil Ambani company is selling real estate assets instead, which will get it only Rs 801 crore. RCom is staring at insolvency if it can’t sell its assets at high enough valuations to repay its debt which stands at Rs 45,000 crore. The company has even defaulted on dollar bonds last week.
“Lenders have approved the sale of real estate asset RCom holds in Delhi and Chennai for Rs 801 crore to Brookfield,” PTI reported quoting a source. RCom has been working on finding investors or buyers for prime real estate assets, including at Dhirubhai Ambani Knowledge City, Navi Mumbai, measuring nearly 125 acres with development rights of potentially over 17 million sq ft and prime property of 4 acre near Connaught Place, New Delhi.
The merger between RCom and Brookfield collapsed nearly a month after the company scrapped its merger with Aircel citing legal and regulatory uncertainties and interventions by various parties. Brookfield reportedly wanted to renegotiate the deal at lesser than the agreed amount due to lack of additional Aircel tenancies. “The merger will not proceed and therefore our transaction as previously announced will not proceed either. However, we continue to monitor the evolving situation to determine if revised terms can be agreed upon,” Brookfield Infrastructure Partners said in an SEC filing on November 3.
RCom is reeling under a total debt of Rs 45,000 crore. Of this, Rs 25,000 crore is domestic debt and remaining Rs 20,000 crore is in the form of foreign loans and bonds. In June this year, RCom got a seven-month breather from its lenders as part of a strategic debt restructuring (SDR) scheme. RCom said it would repay its Rs 25,000 crore debt from two merger deals with Aircel and Brookfield of Rs 14,000 crore and Rs 11,000 crore respectively. However, both the deals have now collapsed.
Last week, the company announced another plan to repay its debt as the December deadline is inching closer. The company proposed converting Rs 7,000 crore debt into 51% equity and handing over to banks. The company claimed that under the new plan there will be zero write-offs for the lenders. As on Monday, RCom’s market valuation stood at Rs 3,900 crore only.
RCom said the company will be raising another Rs 17,000 crore to repay the debt through the asset sale. Of this, the company will raise around Rs 10,000 crore through the sale and commercial development of real estate assets. Ericsson India, one of the firm’s creditors, has filed a petition to put Reliance Communications into the insolvency process and India’s National Company Law Tribunal has deferred the hearing for the case to November 23.