Loss and missed pay­ments send shares plung­ing to record lows

The Gulf Today - Business - - FRONT PAGE -

MUMBAI: In­dia’s Re­liance Com­mu­ni­ca­tions (Rcom) posted a fourth straight quar­terly loss and said it failed to pay in­ter­est on some deben­tures, send­ing the debt-laden firm’s shares tum­bling 14 per cent to a record low and its bonds down on Mon­day.

The Anil Am­bani-con­trolled tele­com op­er­a­tor re­ported a quar­terly loss of 27.09 bil­lion ru­pees ($414.06 mil­lion), com­pared with a profit of 620 mil­lion ru­pees a year ago. Rev­enue nearly halved to 26.67 bil­lion ru­pees, amid a price war started by up­start ri­val Re­liance Jio, which is backed by Anil’s elder brother Mukesh Am­bani. Rcom, as the com­pany is widely known, also said in a se­cu­ri­ties fil­ing over the week­end that it has missed in­ter­est pay­ments on two out­stand­ing do­mes­tic non­con­vert­ible deben­tures.


The loss and missed pay­ments make a re­cov­ery for Rcom that much harder and come at a time when there are doubts about a pre­vi­ously flagged debt-re­struc­tur­ing plan.

Shares in the com­pany fell as much as 14.2 per cent on Mon­day and were down 11.4 per cent at 0750 GMT.

With net of debt of 443 bil­lion ru­pees as of end-march, Rcom is the most lever­aged among listed In­dian tele­com com­pa­nies.

Af­ter its pre­vi­ous plan to cut debt by sell­ing tow­ers to Canada’s Brook­field and merg­ing its wire­less busi­ness unit with ri­val Air­cel fell apart, Rcom came up with a new plan last month pledg­ing to re­pay a to­tal 270 bil­lion ru­pees from new deals for its tow­ers, in­fra­struc­ture as­sets, and real es­tate.

It has yet to fi­nalise buy­ers for any of the as­sets it is plan­ning to sell.

As part of the lat­est plan, the com­pany has said banks will con­vert about 70 bil­lion ru­pees of its debt to eq­uity un­der the cen­tral bank’s strate­gic debt re­struc­tur­ing plan.

The debt-eq­uity con­ver­sion plan may, how­ever, run into trou­ble as bankers and Rcom are at log­ger­heads over treat­ment of loans which Rcom has taken from its group com­pa­nies, the Eco­nomic Times news­pa­per re­ported on Sun­day.

The com­pany de­clined to com­ment on that story, but pointed to com­ments from its Ex­ec­u­tive Di­rec­tor Pu­nit Garg, who in late Oc­to­ber said he was con­fi­dent the strate­gic debt re­struc­tur­ing plan would pro­ceed.

As part of the deal with banks Rcom says it has won a re­prieve on pay­ments to lenders un­til De­cem­ber 2018.

Its over­seas bonds also dipped on Mon­day, with Rcom’s 6.5 per cent bonds due 2020 in­di­cated at 35/37 cents on the dol­lar. The bonds have trended sharply lower in the last six weeks as Rcom’s woes have mounted.

Re­liance Com­mu­ni­ca­tions missed a coupon pay­ment last week, drag­ging off­shore bond­hold­ers into a debt re­struc­tur­ing that has al­ready hit the com­pany’s on­shore lenders.

Bil­lion­aire Anil Am­ban­iís tele­com com­pany missed a Novem­ber 6 pay­ment of $9.75 mil­lion on its 6.5 per cent $300 mil­lion bonds ma­tur­ing in Novem­ber 2020. Past a seven-day grace pe­riod, the is­suer will be in de­fault.

Rcom said in a press re­lease that it would not pay bond coupons “for the time be­ing”.

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