RCom Of­fers Ma­jor­ity 51% Stake to Lenders

The Economic Times - - Companies: Pursuit Of Profit Catch The Signal: Gea - Our Bureau KALYAN PARBAT

Mum­bai: Re­liance Com­mu­ni­ca­tions (Rcom) has pre­sented a fresh “zero write-off ” plan to its lenders, un­der which banks could con­vert some of its debt and take a ma­jor­ity 51% stake in the telecom op­er­a­tor. The com­pany could then raise funds by sell­ing its tow­ers and spec­trum to po­ten­tial buy­ers, in­clud­ing Re­liance Jio In­fo­comm, and mon­etis­ing real es­tate as­sets.

The joint lenders fo­rum (JLF) could con­vert around ₹ 7,000 crore of the com­pany’s over ₹ 45,000 crore debt into eq­uity, ex­ec­u­tive di­rec­tor Pu­nit Garg said. They can then bring in an in­vestor, who can take a call on the fu­ture man­age­ment struc­ture of the Anil Am­bani-con­trolled car­rier.

Un­der the pro­posal, pro­mot­ers would hold around 25-26% of RCom post the con­ver­sion of debt. They held around 65%, in­clud­ing nearly 6% of locked in shares, at the end of Septem­ber. Around 65.5% of the pro­moter hold­ing is pledged, ac­cord­ing to BSE data.

As part of the as­set mon­eti­sa­tion plan, to be com­pleted by March 2018, the telco ex­pects to raise ₹ 17,000 crore through sale of as­sets such as telecom tow­ers and spec­trum, which has seen in­ter­est from Jio, Garg said.

“As far as in­ter­est is con­cerned, I think at this mo­ment they (Jio) are very much in­ter­ested in a lot of our as­sets. They have said very clearly, if it is run by lenders, they are happy to bid and pick up some as­sets from them,” said the ex­ec­u­tive.

Garg said while talks with Cana­dian as­set man­age­ment com­pany Brook­field for a sale of tow­ers were still on­go­ing, other buy­ers could also bid and the as­sets would go to the high­est bid­der. Sources at Brook­field said its deal to buy RCom’s stake in tower unit Re­liance In­fratel was off. The Cana­dian com­pany, though, de­clined com­ment.

The com­pany plans to raise another ₹ 10,000 ₹ ET Poll est. for Q2 ended Sep FY’18 Q2 Ac­tu­als; Sep FY ’17 NO crore via sale of real es­tate, which in­cludes its 125-acre Dhirub­hai Am­bani Knowl­edge City prop­erty near Mum­bai, Garg said. All the pro­ceeds would be used to re­duce the debt.

“RCom is un­der a stand­still pe­riod (for in­ter­est and prin­ci­pal re­pay­ments) till De­cem­ber 2018 and ex­pects to com­plete the SDR (strate­gic debt re­struc­tur­ing) process as per ap­pli­ca­ble RBI guide­lines,” the com­pany said in a state­ment.

Shares of Rcom closed at ₹ 15.70, down 1.57%, on BSE on Mon­day. Its mar­ket cap stood at ₹ 3,907.70 crore.

“The lenders were very com­fort­able look­ing at the con­ser­va­tive man­age­ment es­ti­mates,” said Garg. The sale of as­sets, for which there is strong in­ter­est, will be run by JLF, he added.

When asked if the pro­posal has re­ceived lenders’ ap­proval, Garg said: “Do you think lenders can refuse a zero write-off plan ... they got to be so happy and thrilled; they wanted it to be com­plete as of yes­ter­day.”

In its state­ment, RCom said it is work­ing “closely with SBI Cap­i­tal mar­kets”, the ad­viser ap­pointed by lenders to run a com­pet­i­tive process in a trans­par­ent man­ner to mon­e­tise the com­pany’s as­sets, in­clud­ing spec­trum, tower and fi­bre, me­dia con­ver­gence nodes and prime real es­tate.

RCom, which said it will run a non-mo­bile busi­ness, also con­firmed it will be clos­ing 2G and 3G voice op­er­a­tions and con­cen­trate on B2B seg­ment and 4G busi­ness. ET was the first to re­port on this de­vel­op­ment. There are 13 mil­lion cus­tomers in the com­pany’s 4G sec­tion and its B2B port­fo­lio in­cludes en­ter­prise, car­rier, an In­ter­net data cen­tre and global submarine cable net­work in In­dia and over­seas. RCom ex­pects to be ranked among the top three top data play­ers.

“B2B busi­nesses are sta­ble, cap­i­tal light and have sus­tained and pre­dictable an­nu­ity rev­enues and prof­its, with im­mense growth po­ten­tial amidst low com­pet­i­tive in­ten­sity,” the firm said. ₹ ET Poll est. for Q2 ended Sep FY’18 Q2 Ac­tu­als; Sep FY ’17 ₹

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