Reliance Communications, Aircel merger: Lenders to Anil Ambani firm to meet soon; debt weight at massive Rs 45,000 cr

By: |
Mumbai | Updated: October 4, 2017 6:30:51 AM

Even as the beleaguered Reliance Communications (RCom) said on Tuesday it will monetise assets to be able to repay its loans, lenders to the loss-making telco plan to meet soon to weigh their options.

On Sunday, the Anil Ambani-promoted RCom announced that the merger proposal with Aircel had lapsed by mutual consent.On Sunday, the Anil Ambani-promoted RCom announced that the merger proposal with Aircel had lapsed by mutual consent. (Reuters)

Even as the beleaguered Reliance Communications (RCom) said on Tuesday it will monetise assets to be able to repay its loans, lenders to the loss-making telco plan to meet soon to weigh their options. On Sunday, the Anil Ambani-promoted RCom announced that the merger proposal with Aircel had lapsed by mutual consent.

A senior banker with a state-run bank said the joint lenders’ forum (JLF) will meet soon to assess the situation and consider the options.

With the merger being called off, bankers have been left high and dry. Given the weak financials of the telco, which is weighed down by close to Rs 45,000 crore of debt, lenders can hope to recover their money once the company’s assets are sold. “The company says it will find a new investor so we are waiting,” senior bankers said. “If the company is not able to find a buyer or investor soon and pay back some of the debt, we will take a call on what to do next,” a senior banker with a public-sector bank added.

In June, banks had given the telco seven months time, till end-December, to push through the merger. The merger was expected to lower RCom’s debt by about `15,000 crore. Currently, the RCom account is not classified as an non-performing asset (NPA) as it is under the strategic debt restructuring (SDR) scheme.

Meanwhile, the RCom stock collapsed on Tuesday, hitting a fresh all-time low of Rs 16.75 in intra-day trade and ending the session at `17.10, a fall of nearly 11%. The stock has lost 68% since September 2016 with Rs 9,159 crore of market value being wiped out.

RCom executive director Punit Garg said on Tuesday that the company was looking to sell assets that would fetch it Rs 25,000 crore. The company is also looking to monetise its tower, fibre and real estate assets and optimise its spectrum portfolio.

Garg said that in line with RCom’s strategy to focus on 4G, it would look to trade the remaining spectrum that was not being used for 4G.

The company is hoping to make a 100% exit from its tower business and is in discussions with Canadian infrastructure fund Brookfield though valuations could be impacted in the absence of an upside from additional tenancies from Aircel.

In December last year, Brookfield had agreed to pay Rs 11,000 crore for a 51% stake in Reliance Infratel.

Garg said that the company has discussed the plan with lenders and would be making a presentation to the JLF.

State Bank of India, IDBI Bank, Punjab National Bank and Bank of Baroda are among the lenders who have an exposure to RCom.

In June, a consortium of lenders had given the company seven months time to pare its Rs 45,733 crore debt and service loans regularly. For RCom, the merger with Aircel was crucial since it was aiming to reduce its debt by about 60% through the process. The two companies had signed a binding agreement to explore merger possibilities in September 2016.

RCom posted a net loss of Rs 1,210 crore on revenues of Rs 3,591 crore in the April -June quarter. In 2016-17, it posted a net loss of Rs 1,283 crore on revenues of Rs 19,949 crore.

Get live Stock Prices from BSE and NSE and latest NAV, portfolio of Mutual Funds, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.

Next Stories
1No impact of Aircel merger cancellation on Reliance Communications’ rating, says Moody’s
2Amazon to charge Rs 999 for ‘Prime’ subscription soon
3High debt to limit Reliance Communications ability to renew spectrum: CLSA