In what may come as a welcome breather for Anil Ambani, China Development Bank has withdrawn its insolvency plea against Reliance Communications (RCom).
In what may come as a welcome breather for Anil Ambani, China Development Bank has withdrawn its insolvency plea against Reliance Communications (RCom), CNBC-TV18 reported. The Indian wireless company owned one-fifth of its $7 billion debt to CDB, which organized a syndicated loan for billionaire Anil Ambani’s firm in 2011. While operational creditors such as Ericsson India Private Ltd. and Tech Mahindra Ltd. had approached India’s National Company Law Tribunal to start insolvency proceedings against RCom, CDB’s insolvency petition came as the biggest challenge for Ambani’s desire to hold on to at least a minority stake. China Development Bank (CDB) filed an insolvency petition against Reliance Communications to the National Company Law Tribunal to recover about 114.6 billion rupees ($1.8 billion) in November last year. Now only Swedish equipment maker Ericsson remains as the only foreign company battling to recover dues from the Anil Ambani-led company. After this news, the RCom stock soared over 6%. The shares were trading at Rs 34.70 on BSE at the time of reporting.
Debt-ridden Reliance Communications Chairman Anil Ambani in December last year announced a massive debt-recast plan under which the company made exit from the strategic debt restructuring plan with a zero write-off to lenders and bankers. The plan asked Reliance Communications to reduce its debt by monetising the assets of its wireless business and no part of the debt will be converted into equity under the new plan, he said. Anil Ambani debt recast plan to revive Reliance Communications came as a rescue to the company which was facing the threat of insolvency as it has defaulted on US dollar bonds and has failed to clear dues to its domestic and foreign lenders. The major part of the debt would be reduced via prepayments and post the debt reduction exercise, Reliance Communications debt will substantially reduce to Rs 6,000 crore from Rs 45,000 crore. The huge reduction of Rs 39,000 crore from the debt is the largest debt reduction in the history of corporate India, Anil Ambani had said in the presser issued that day.