Debt-laden Reliance Communications, owned by Anil Ambani, may get rescued by his elder brother Mukesh Ambani’s Reliance Jio. As RCom has announced reducing its debt by monetising the assets of its wireless business, Reliance Jio has become the front-runner in the race to buy company’s tower assets, ET Now quoting unidentified sources said.
Reliance Jio has piped companies like ATC India to become the front-runner in purchasing RCom tower assets. RCom’s asset monetisation drive is expected to conclude by March 2018. Anil Ambani debt recast plan to revive RCom 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 total debt of RCom is Rs 45,000 crore.
Shares of RCom has more than doubled in the 6 days of trading. The share of RCom which emerged as a wealth destroyer and was on a continuous downslide from January 2016 has regained partially after Anil Ambani presented a revival plan on Tuesday to pull up the company from heavy debt burden. The stock of Reliance Communications surged as much as 110% to Rs 26.85 in a 6-day period from 19 December to 27 December.
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. RCom classified Rs 22,550 crore of borrowings as non-current liabilities. RCom posted its first full-year loss of Rs 1,285 crore since its inception for the year ended March 31, 2017.
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, both failed to take-off. Bloomberg called it “summer sale”.