Road ahead for Reliance Communications gets tougher

Another big blow has landed on Reliance Communications as China Development Bank filed an insolvency suit to National Company Law Tribunal (NCLT) for defaulting on loans. The bank had lent the company loan worth US$ 1.78 billion.

The company is already trying to work out a solution to get rid of its Rs 45,700 crore debt. Indian lenders are taking a call on the conversion of this debt into equity. They may oppose the Chinese bank’s petition. However, the company said that they have not received any communication from the China Development Bank (CDB) and NCLT.

Before this move from CDB, operational creditors Ericsson India and Manipal Tech had filed bankruptcy petitions against the company. IT firm Tech Mahindra has also filed a petition against RCom but later both the parties settled their dues in out of court patch-up.

In May 2017, a merger between RCom and Aircel was expected but it did not materialise. Company was also planning to sell its telecom towers to Brookfield for Rs 11,000 crore. However, this transaction also did not work out. This has further complicated the situations for RCom.

In April, company’s stock soared high at Rs 40.75 per share. Later, on grounds of debt restructuring matters, the stock tumbled by ~75 per cent to Rs 10.15 in mid-November. On Monday, it closed at Rs 13.35 and dipped by ~4 per cent in the morning session.