Reliance Communications rose 20.49% to Rs 25.70 at 10:03 IST on BSE after the company announced its exit from the strategic debt restructuring plan with a zero write-off to lenders.
The announcement was made after market hours yesterday, 26 December 2017.Meanwhile, the S&P BSE Sensex was up 101.52 points, or 0.30% to 34,112.13.
On the BSE, 2.57 crore shares were traded in the counter so far, compared with average daily volumes of 2.22 crore shares in the past two weeks. The stock had hit a high of Rs 26.66 and a low of Rs 23.46 so far during the day. The stock hit a 52-week high of Rs 41 on 6 April 2017. The stock hit a record low of Rs 9.60 on 15 November 2017.
Reliance Communications (RCom) announced its exit from the Reserve Bank of India (RBI)'s Strategic Debt Restructuring (SDR) framework, with zero equity conversion and zero loan write-offs for lenders and bond holders. Upon completion of all transactions as announced, the balance debt in RCom is expected to be approximately Rs 6000 crore only, representing reduction of over 85% of total debt.
RCom has worked closely with all lenders and SBI Capital Markets, the advisors appointed by the lenders, to run a competitive process in a transparent manner to monetize its valuable assets comprising 122.4 MHz of 4G spectrum in the 800/900/1800/2100 MHz bands; over 43,000 towers; about 1,78,000 route km (RKM)of fiber with Pan India footprint; 248 media convergence nodes, covering about 5 million square feet, used for hosting telecom infrastructure; and prime real estate located in New Delhi, Chennai, Kolkata, Jigni and Tirupati.
Lenders have received the final binding bids and all transactions are expected to be closed in a phased manner between January and March 2018. The monetisation of these assets alone will lead to reduction of RCom's debt by about Rs 25000 crore, through prepayment of loans, transfer of Department of Telecommunications (DoT)'s deferred spectrum payment liabilities, etc. Commercial Development of DAKC Campus at New Bombay.
The combination of the above transactions will lead to about 85% reduction in RCom's total debt and liabilities. All transactions are subject to lenders' and other applicable approvals.
Meanwhile, RCom said that its continuing operations will comprise stable and profitable Business-to-business (B2B)-focused businesses, including Indian and Global Enterprise, Internet data centres and the largest private submarine cable network in the world. These B2B businesses are stable, capital light and have sustained and predictable annuity revenues and profits, with immense growth potential amidst relatively low competitive intensity.
RCom will receive equity infusion from global strategic partners for further debt reduction, consequent upon a stake sale process already underway, and being conducted by Credit Suisse. RCom's balance debt is expected to be a highly conservative around Rs 6000 crore only, upon completion of all transactions.
On a consolidated basis, RCom reported a net loss of Rs 2709 crore in Q2 September 2017, compared with net profit of Rs 62 crore in Q2 September 2016. Net sales declined 48.7% to Rs 2615 crore in Q2 September 2017 over Q2 September 2016.
RCom has established a pan-India digital network that is capable of supporting services spanning the entire communications value chain, covering over 21,000 cities and towns and over 400,000 villages. Reliance Communications owns and operates the world's largest Next-Generation IP-enabled connectivity infrastructure, comprising over 280,000 kilometres of fibre optic cable systems in India, the USA, Europe, Middle East and the Asia-Pacific region.
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