RCom Offers Majority 51% Stake to Lenders
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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