RCom gets 7-month reprieve to repay debt burden

In a big relief to the debt-ridden Reliance Communications (RCom), bankers have agreed to pause debt repayments from the company for seven months till December 2017, under the RBI’s Strategic Debt Restructuring (SDR) plan.

RCom, which had a debt of around Rs 45,000 crore, presented the SDR, which is likely to reduce debt by Rs 20,000 crore or 60% by September 2017, according to chairman Anil Ambani, who spoke to the media after nearly 10 years.

“We had a meeting of all the lenders from RCom  and presented our plan for strategic transformation. The lenders have constituted a joint lending forum and the company will receive a standstill for debt serving obligation till December 2017,” Ambani said.

“Lenders have taken note of progress made on our strategic transformation programme, especially of the merger of India wireless business with Aircel and also of the pact with Brookfield for the sale of tower assets. Both these transactions will reduce 60% of the company’s debt from Rs 45,000 crore to Rs 20,000 crore, which will be the largest ever debt reduction in the history of India,” Ambani added.

 According to Ambani, the company will also look at further deleveraging options in order to reduce debt. “The company has many options when it comes to deleveraging. We could look at a strategic sale of our global business Global Cloud Xchange and are also open to selling our direct to home business,” Ambani said. “RCom has sold only 51% in the tower asset for Rs 11,000 crore and we can also look at further sale in the unit besides looking at a listing of the merged wireless entity, which will be called AIRCOM,” Ambani added.

Asked specifically on whether the lenders will look at converting some debt into equity, Ambani said that the banks are open to doing so if the debt reduction does not happen according to plan.

“As of now, there is no proposal to convert any debt into equity. We are looking to reduce our debt without being a non-performing asset. However, if the debt reduction does not happen by the end of the standstill period, the banks are open to convert debt into equity and that is a seperate issue,” Ambani said.