Reliance Communications (RCom) has finalised a new resolution plan to reduce its debt by up to Rs 39,000 crore through prepayment and form a new RCom with debt levels under Rs 6,000 crore, company chairman Anil Ambani told the media here.
The resolution plan involves exiting strategic debt restructuring (SDR) and monetising some of the company's assets, including transfer of spectrum liabilities by March 2018.
The asset monetisation plan includes sale of wireless, tower and fibre portfolios, mobile switching nodes and real estate, and the entire process was completed in “record time of 49 days”.
Anil Ambani, chairman of Anil Dhirubhai Ambani Group, said the resolution plan is an all-cash deal that involves “no conversion of debt to equity” and will have “zero write-offs to lenders and the deal transactions will aim to complete full and final closure in a phased manner between January and March 2018”.
Addressing the media, Ambani said the resolution plan involves development of 125 acres of land at DAKC (Dhirubhai Ambani Knowledge City in Navi Mumbai) worth Rs 25,000 crore.
The new RCom will now be a B2B company and will have undersea cable business and 4G spectrum sharing with Reliance Jio. It will be run with a capital-light approach with a debt of under Rs 6,000 crore.
"We have received 15 non-binding offers for stake sale in RCom and the entire asset monetization would go into prepayment of the dues to the lenders," Ambani said.
The telecom company, which has a total debt of nearly Rs 45,000 crore, has been facing a series of petitions at the National Company Law Tribunal (NCLT) by domestic lenders, Chinese banks and most recently, a public relations firm.
Of the total debt, Rs 25,000 crore is domestic debt and remaining Rs 20,000 crore is in the form of foreign loans and bonds.
The company has struggled to repay its dues because of increased competition after the entry of Reliance Jio and falling tariffs in the telecom industry. RCom has already decided to shut its 2G wireless business and merge its 4G services with its enterprise unit.
RCom story so far
The Anil Ambani-promoted firm has been looking to sell assets to reduce the debt on its books. In June, the company’s domestic lenders decided to invoke the SDR scheme and convert Rs 7,000 crore of debt into a majority equity holding.
As part of the plan, the company had said it would raise Rs 33,000 crore through asset sales. At the time, the company planned to merge its wireless business with Aircel and sell stake in its mobile towers business to Canadian investor Brookfield Infrastructure.
Neither of the deals went through.
Trouble mounted after shares of Reliance Communications fell below the agreed conversion price of Rs 24.71 per share. This meant that lenders would take a hit immediately upon conversion.
In November, RCom defaulted on its outstanding US dollar bonds - the first such default by an Indian company in 15 months. In the same month, China Development Bank filed an insolvency plea against the company. Operational creditors, including Ericsson and Manipal Technologies, have also filed insolvency pleas.
In November, RCom sold its direct-to-home subsidiary, Reliance BIG TV, to Veecon Media and Television for an undisclosed amount.