RCom lenders make final effort to make SDR work

Lenders to Reliance Communications (RCom) discussed the bids the firm has received for the sale of assets and conversion of part debt into equity to avert the provisioning burden if the asset were to turn bad at the at the joint lenders’ forum (JLF) on Wednesday. The JLF meeting will continue on Friday.

Senior public sector bankers said though the firm was trying to sell some assets to repay loans and clear bank dues, no decision has been taken so far.

However, sources close to the development said the company plans to sell some assets within the next few days to bring in another Rs 11,000 crore. The announcement on the asset sale could be made as early as next week.

If the strategic debt restructuring (SDR) fails, banks will have to cough up a big amount as provisions for bad loan. Lenders are making a last-ditch effort to avoid this situation as the first milestone for review of the SDR is on December 28.

While RCom is a stressed account, it is treated as standard on the books of banks under the SDR package that was put together in June 2017. The account could be treated as standard till December 2018, subject to satisfactory working of the SDR package.

RCom owed Rs 44,700 crore of debt as on March this year.

A senior banker said the banks were trying their best to salvage the company. “We have not cleared any proposal yet and would want the company to sell assets first,” a senior banker told this paper.

According to a plan announced earlier, RCom’s lenders were to convert debt into 51 per cent equity at the rate of Rs 24.71 a share. This works out to Rs 7,100 crore of debt being converted into equity. But this plan was dependent on RCom merging its wireless telephony operations into Aircel and sell its telecom towers for Rs 11,000 crore to Brookfield. Both deals failed to materialise before October. According to the SDR package, lenders are to take a call on conversion of debt into equity by December. The SDR programme allows the company not to pay its dues until the end of December next year.

Reliance Communications (RCOM)