RCom shares gain 41% as Anil Ambani says debt to be reduced by Rs 39,000 crore

Shares of Anil Ambani’s debt-laden telecommunications company RCom zoomed over 38% in the mid-morning trades on Tuesday. Anil Ambani said the total debt of the company would be reduced by Rs 39,000 crore and the company will close all the transactions by January-March 2018. In the Reliance Communications presser held on Tuesday, Anil Ambani said the company will exit the strategic debt restructuring plan with a zero write-off to lenders and bankers. Reliance Communications will be reducing 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. Shares of Reliance Communications surged as much as 41.1% to the day’s high of Rs 23.2 on NSE while the stock rose 41.02% to hit a day’s high of Rs 23 on BSE. Following a huge spurt in the share price of Reliance Communications, the market capitalisation of RCom jumped to Rs 6,360.73 crore from Rs 4,510.59 crore as per the Friday’s closing price of Rs 16.31 on BSE.

Anil Ambani massive debt recast plan to revive Reliance Communications comes as a rescue to the company which was facing the threat of insolvency as it has defaulted to 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 said in the presser.

The stock of Reliance Communications had been surging since last week on the buzz of Mukesh Ambani buying the assets of Anil Ambani’s RCom. Shares of Anil Ambani’s debt-laden telecom company Reliance Communications have zoomed as much as 65% in just three days on news that Mukesh Ambani’s Reliance Jio may acquire its assets. “RJio is leading the talks to acquire all assets RCom intends to sell, while a number of Private Equity (PE) firms and other strategic investors are also in the fray. The company is also in talks with foreign lenders for co-development of its Dhirubhai Ambani Knowledge City (DAKC) campus in Navi Mumbai,” the Business Line reported citing an unidentified source. Following this news article, NSE and BSE sought a clarification from Reliance Communications to which the reply is still awaited.

Earlier on Wednesday, 20 December 2017, RCom zoomed as high as 45% in the late afternoon trades before settling up 35.23% at Rs 17.27. Following this, BSE and NSE sought clarification from Reliance Communications Ltd with respect to a massive increase in share prices on which Reliance Communications said “the Company cannot comment on changes in volume and price in the stock markets. Appropriate disclosures will be made in accordance with applicable regulations, as and when any disclosable event occurs.”

On 15 November 2017, Most shares of the Reliance ADAG tumbled sharply amid heavy trading volumes on Wednesday in the late afternoon trade, with the Anil Ambani group’s Reliance Communications shares falling to single digits for the first time ever. Shares of Reliance Communications fell 17% to hit an all-new record low of Rs 9.6. Reliance Communications was struggling with a heavy debt burden amid the ongoing tariff wars in the telecom sector which has eaten into margins. RCom was 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.