RCom shares, bonds fall on Q2 loss, missed payments
Mumbai: Reliance Communications Ltd (RCom) posted a fourth straight quarterly loss and said it failed to pay interest on some debentures, sending the debt-laden firm’s shares tumbling 14 percent to a record low and its bonds down on Monday.
RCom shares closed 13.52% lower at Rs12.15 on BSE, while the Sensex fell 281 points, or 0.84%, to close at 33,033.56. Shares fell as much as 14.2% during the day.
The Anil Ambani-controlled telecom operator reported late on Saturday a quarterly loss of Rs2,709 crore, compared with a profit of Rs62 crore a year ago. Revenue nearly halved to Rs2,667 crore, amid a price war started by upstart rival Reliance Jio, which is backed by Anil’s elder brother Mukesh Ambani.
RCom, as the company is widely known, also said in a securities filing over the weekend that it has missed interest payments on two outstanding domestic non-convertible debentures.
The loss and missed payments make a recovery for RCom that much harder and come at a time when there are doubts about a previously flagged debt-restructuring plan.
With net of debt of Rs44,300 crore as of end-March, RCom is the most leveraged among listed Indian telecom companies.
After its previous plan to cut debt by selling towers to Canada’s Brookfield and merging its wireless business unit with rival Aircel fell apart, RCom came up with a new plan last month pledging to repay a total Rs27,000 crore from new deals for its towers, infrastructure assets, and real estate.
It has yet to finalise buyers for any of the assets it is planning to sell.
As part of the latest plan, the company has said banks will convert about 70 billion rupees of its debt to equity under the central bank’s strategic debt restructuring plan.
The debt-equity conversion plan may, however, run into trouble as bankers and RCom are at loggerheads over treatment of loans which RCom has taken from its group companies, the Economic Times newspaper reported on Sunday.
The company declined to comment on that story, but pointed to comments from its Executive Director Punit Garg, who in late October said he was confident the strategic debt restructuring plan would proceed.
As part of the deal with banks RCom says it has won a reprieve on payments to lenders until December 2018.
Its overseas bonds also dipped on Monday, with RCom’s 6.5 percent bonds due 2020 indicated at 35/37 cents on the dollar. The bonds have trended sharply lower in the last six weeks as RCom’s woes have mounted. Reuters
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