Today the shares of Indias largest communication service provider Reliance Communications Ltd has plunged over 48% in morning trade after the company has decided to opt for insolvency proceedings, following its failure to sell assets for paying back its lenders.
RCom fell as much as 48.27% on BSE to Rs 6 a share intraday. At 9.40 am, the stock was trading at Rs.7.34 on BSE, down 36.7% from its previous close. In comparison, benchmark Sensex fell 0.23% to 36,386.78 points.
According to the report, RCom’s USD bonds due November 2020 rose 2 cents on the dollar to 25.02 cents, the biggest move since September 20.
Shares of other Anil Ambani Group Company also fell. Reliance Capital Ltd declined 11%, Reliance Infrastructure Ltd 7%, Reliance Power Ltd 11%, and Reliance Naval and Engineering Ltd 11%.
“RCom board of directors decides upon implementation of debt resolution plans through NCLT framework,” the company said in a statement.
As of March 2018, the company has a total net debt of Rs.46,5crores, according to the report.
With this, Reliance Communications joins Aircel in the list of telecom companies that have opted for insolvency.
Reliance Communication said that it had to opt for insolvency because of lack of 100% approvals and consensus, as mandated by RBI’s 12th February 2018 circular, on all important issues, amongst over 40 lenders, Indian and foreign, despite the passage of 12 months and over 45 meetings, besides the numerous legal issues it faced at various courts.
The proposed sale of RCom’s spectrum assets to Reliance Jio was announced in December 2017 and was initially expected to be cleared by March 2018 to repay lenders. It was stuck in line after Jio expressed difficulty in providing an undertaking to the government to settle RCom’s dues until it was protected from RCom’s past liabilities by a bank guarantee.
The company had chalked out plans to sell assets for about Rs.25,0croresore and use it for clearing debt of around 40 lenders. RCom was expecting to realise Rs.975 crore from sale of spectrum to Jio which it promised to use paying dues of Rs.550 crore to Ericsson and Rs.230 crore to settle dues of minority stakeholder Reliance Infratel.