Shares of Reliance Communications Ltd or RCom today slumped 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 6 a share intraday. At 9.40 am, the stock was trading at 7.34 on BSE, down 36.7% from its previous close. In comparison, benchmark Sensex fell 0.23% to 36,386.78 points.

RCom’s USD bonds due November 2020 rose 2 cents on the dollar to 25.02 cents, the biggest move since September 20, according to prices compiled by Bloomberg.

Shares of other Anil Ambani group companies 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 ha total net debt of 46,547 crore, according to Bloomberg data.

With this, Reliance Communications joins Aircel in the list of telecom companies that have opted for insolvency.

Reliance Communications 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 limbo after Jio expressed difficulty in providing an undertaking to the government to settle RCom’s dues till it was protected from RCom’s past liabilities by a bank guarantee

The company had chalked out plans to sell assets for about 25,000 crore and use it for clearing debt of around 40 lenders. RCom was expecting to realise 975 crore from sale of spectrum to Jio which it promised to use paying dues of 550 crore to Ericsson and 230 crore to settle dues of minority stakeholder Reliance Infratel.

In the absence of this undertaking, the department of telecommunications (DoT) last month refused to issue a no-objection certificate for the RCom-Jio deal.

In a separate statement on Sunday, the company said its proposal under the bankruptcy process will be the same as the previous plans it pursued with creditors. This includes sale of all telecom infrastructure assets and spectrum, as well as real estate assets. (With Agency Inputs)

*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.

Close