RCom sinks on bankruptcy
mumbai — Shares and bonds of Reliance Communications Ltd tumbled after an Indian tribunal ordered that the wireless carrier be placed in insolvency proceedings, jeopardising its proposed $3.7 billion asset sale to Reliance Jio Infocomm Ltd.
Shares of RCom, as the company is known, dropped as much as 21 per cent on Wednesday in Mumbai to a record low, while its 2020 dollar bonds plummeted the most in more than 7 months. The Mumbai bench of the National Company Law Tribunal on Tuesday accepted a petition from the Indian unit of network-equipment maker Ericsson, which is seeking to recover ₹11.6 billion ($170 million) in unpaid dues from the telecommunications company controlled by billionaire Anil Ambani.
The court order sets back RCom’s planned sale of airwaves, towers and fiber assets to Reliance Jio, the phone company owned by Ambani’s older brother Mukesh, who is India’s richest man. The decision on RCom, which is seeking to reduce its $7 billion of debt load, comes after Aircel filed for court protection from creditors in February.
RCom can appeal the verdict with a tribunal in New Delhi. The company and 2 of its subsidiaries will decide on the next course of action after studying the detailed order, RCom said in an exchange filing.
The company’s 2020 dollar bonds fell 2.9 cents on the dollar to 58 cents in Hong Kong on Wednesday morning, according to Bloomberg-compiled prices. —