Reliance Group Chairman Anil Ambani on Tuesday said the company has achieved full resolution of Reliance Communications’ (RCOM) debt, reducing it by Rs 25,000 crore to Rs 6,000 crore by monetising assets. “We have achieved the full resolution that involves Reliance Communications exiting strategic debt recast. What we have achieved, in the face of extraordinary challenges, is truly historic and unprecedented in Indian corporate history. RCOM debt will reduce by Rs 25,000 crore. The entire monetisation process to repay the debt of lenders will be completed by January-March 2018 in a phased manner,” Ambani told reporters here.
Ambani said that in the debt reduction, there would be no write-off for any lender or bondholder. “There will be no conversion of debt to equity as well,” Ambani added. Reliance Communications had close to Rs 45,000 crore debt on its books in October 2017, he had said. The RCOM stock rose sharply on the announcement, closing at 30.78 % higher at Rs 21.33. He said the company had faced a lot of headwinds in the last few months with respect to National Company Law Tribunal. “It was challenge… how do you really manage 35 global and Indian banks to come on the same page,” Ambani said.
Saying that going forward Reliance Communications will be a business-to-business (B2B) company, he added the company achieved this debt restructuring by asset monetisation of wireless business and selling real estate. The new company would have a debt of Rs 6,000 crore representing the reduction of over 85% of the total debt. “RCOM’s continuing operations will comprise stable and profitable B2B focused businesses, including Indian and Global Enterprise, Internet Data Centres and the largest private submarine cable network in the world. These B2B businesses are stable, capital light and have sustained and predictable annuity revenues and profits, with immense growth potential amidst relatively low competitive intensity,” he said.
The company has worked closely with all lenders and SBI Capital Markets Limited, the advisors appointed by the lenders, to monetise its valuable assets comprising 122.4 MHz of 4G Spectrum in the 800/900/1800/2100 MHz bands; over 43,000 towers; 178,000 RKM of fiber with pan-India footprint; 248 Media Convergence Nodes, covering 5 million sq ft, used for hosting telecom infrastructure and real estate located in New Delhi, Chennai, Kolkata, Jigni and Tirupati.
“The commercial development of the DAKC (Dhirubhai Ambani Knowledge City) campus will lead to the reduction of RCOM’s debt by a further Rs 10,000 crore, with the SPV holding the real estate assuming non-recourse long-term debt financing of the said amount,” Ambani said. “The combination of the above transactions will lead to 85% reduction in RCOM’s total debt and liabilities, the largest ever in the history of corporate India, and has been achieved in a record 40% working days from the time the plan was presented to lenders,” he said. He said for the new RCOM 50% of revenue will come from outside India.
“Reliance Communications will be now one of the strongest enterprise business of India,” Ambani said. All stakeholders of RCOM, including lenders, bondholders, customers, vendors and employees, and over 1.3 million shareholders will benefit from the fast track debt resolution, a company statement said. He also said that, according to an estimation done by Credit Suisse, the new RCOM will have an enterprise value of Rs 15,000 crore.