Active Stocks
Mon Mar 18 2024 15:55:53
  1. Tata Steel share price
  2. 149.60 5.69%
  1. Tata Motors share price
  2. 972.20 2.75%
  1. ITC share price
  2. 417.40 -0.51%
  1. State Bank Of India share price
  2. 730.70 -0.18%
  1. ICICI Bank share price
  2. 1,082.00 0.32%
Business News/ Industry / Telecom/  Reliance Communications faces risk of insolvency: SC Lowy
BackBack

Reliance Communications faces risk of insolvency: SC Lowy

If Reliance Communications can't sell its assets at high enough valuations then a more likely outcome is an insolvency process, according to SC Lowy Financial

Reliance Communications’ stock price slump also puts the plan to convert a portion of lenders’ debt to equity at risk, according to SC Lowy. Photo: ReutersPremium
Reliance Communications’ stock price slump also puts the plan to convert a portion of lenders’ debt to equity at risk, according to SC Lowy. Photo: Reuters

Hong Kong: Reliance Communications Ltd (RCom) which defaulted on dollar bonds last week in the highest-profile debt failure since India’s new bankruptcy code was passed, faces risks of insolvency if it can’t sell its assets at high enough valuations, according to SC Lowy Financial HK Ltd.

“We think the valuations they have provided are optimistic," said Mihir Chandra, head analyst at the distressed loan and bond trading firm. “If they can’t sell assets at the valuations that they’ve guided to, then the more likely outcome is an insolvency process."

The embattled firm controlled by billionaire Anil Ambani plans to repay debt of as much as Rs27,000 crore ($4.15 billion) through the sale of assets and land, it said last month. It has received expressions of interest from domestic and international telecom and private equity players for various assets, including spectrum, towers and real estate, and the monetization of its assets are at an “advanced stage" the company said on 11 November.

A Reliance Communications spokesman said he would check and reply if there were any comment.

Reliance Communications’ stock price slump also puts the plan to convert a portion of lenders’ debt to equity at risk, according to SC Lowy. The firm’s stock has fallen 65% this year to Rs11.9 on Monday.

“The proposed conversion price is about 24.8 rupees a share, which is twice the stock’s current trading level," said Chandra. “It’s unclear if the banks are going to agree to the proposed conversion price, and if they don’t come to an agreement, there’s a chance it sort of all falls apart."

Ericsson India Private Ltd, one of the firm’s creditors, has filed a petition to put Reliance Communications into the insolvency process and National Company Law Tribunal (NCLT) has deferred the hearing for the case to 23 November. Bloomberg

Reliance Group companies have sued HT Media Ltd, Mint’s publisher, and nine others in the Bombay high court over a 2 October 2014 front-page story that they have disputed. HT Media is contesting the case.

Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed – it's all here, just a click away! Login Now!

Catch all the Industry News, Banking News and Updates on Live Mint. Download The Mint News App to get Daily Market Updates.
More Less
Published: 20 Nov 2017, 02:47 PM IST
Next Story footLogo
Recommended For You
Switch to the Mint app for fast and personalized news - Get App