RCom shares fall 20% on debt repayment worries
RCom’s scrip has plunged 29% this month
MUMBAI: Shares of Reliance Communications fell as much as 23.64% in intraday to hit a record low of ₹19.70, on worries over the company’s ability to repay its debt as well as poor March quarter financial results. It erased some of the early losses to close at ₹20.50, down 20.54% on BSE.
The scrip of the company has been falling since the past few sessions, after rating agency after Credit Analysis and Research Ltd downgraded the credit rating on some of RCom’s long-term and short-term debt. The scrip has fallen 29% so far this month.
Separately, Bloomberg reported that the price of the company’s $300 million 6.5% note due 2020 fell 12.5 cents on the dollar to 71.44 cents as of 10:45 am in Hong Kong, according to Bloomberg-compiled prices. The bonds had plunged 17 cents last week. On Monday, The Economic
Times reported that at least 10 Indian lenders has categorised their debt to the telecom major as either special mention account 1 or SMA-2 (overdue is between 30-90 days).
Some of these lenders will have to treat the account as a bad loan after a fortnight, the report added.
RCom had a huge debt of ₹47,500 crore on its books at the end of March.
Post signing of binding documents for the Aircel and Brookfield transactions, RCom has formally advised all its lenders that it will be making repayment of an aggregate amount of ₹25,000 crore from the proceeds of these two transactions, on or before September 30, 2017, the spokesperson of the company was quoted as saying in the report cited above.
The company has signed a non-binding agreement to sell its tower business to Brookfield Infrastructure Group. It has announced a merger with Aircel.
The company has an inadequate risk profile because its cash and operating cash flow over the next months is unlikely to cover short-term debt and capital expenditure, Bloomberg reported, citing a Monday note from Lucror Analytics.
Lucror to keep ‘negative’ credit bias on Reliance Communications due to intensified competition, “which will continue to pressure RCom’s revenue and earnings, and further weaken its balance sheet.”
On Saturday, RCom reported a March quarter net loss of ₹948 crore, as compared to a profit of ₹79 crore in the corresponding period of the previous fiscal year, hurt by the intense price war unleashed by the entry of the new telecom operator Reliance Jio Infocomm Ltd.