RCOM given until end-2017 to reduce debt; Aircel/RCOM unit to be dubbed Aircom

5 Jun 2017

Reliance Communications’ (RCOM’s) lenders have granted the wireless provider a ‘standstill’ until the end of December 2017, during which it will not have to service debts, and its loans will not accrue interest, the Economic Times reports. The reprieve is intended to give RCOM time to complete the sale of a 51% stake in its infrastructure arm Reliance Infratel (RITL) to Canada’s Brookfield Infrastructure Partners and the merger of its wireless operations with Aircel – which, it was also announced, will be branded ‘Aircom’ – with the transactions expected to reduce the firm’s debt by INR250 billion (USD3.9 billion) to INR200 billion. The news outlet notes that the joint lenders’ forum (JLF) agreed to the measure following a series of financial setbacks at RCOM, including recording its first annual net loss, delays on a number of interest payments, falling stock prices and a ratings downgrade.

Chairman Anil Ambani commented in a press conference that if the company finds its outstanding debt unsustainable it still has the option to sell off its remaining international telecoms business, Global Cloud Xchange, reducing its stake in Aircom, or selling the rest of its stake in Reliance Infratel.

Should RCOM fail to complete the two aforementioned deals by the deadline, the operator’s lenders have the option to force a debt recast, or could potentially convert their debt into equity in the firm via strategic debt restructuring (SDR).

India, Aircel, Brookfield Infrastructure Partners, Reliance Communications (RCOM), Reliance Infratel (RITL)