No loan write off needed, lenders to take 51% after conversion: RCom

Reliance Communications (RCOM) on Monday offered a comprehensive debt-resolution plan to its domestic and foreign lenders, saying it will not involve any loan write-off by the lenders.

"RCOM's debt resolution plan envisages no loan write-off by the lenders. RCOM will pay off up to Rs 17,000 crore of its debt, out of the proceeds of monetisation of spectrum, towers and fiber and MCN (Media Convergence Nodes) assets," a company statement said here.

"RCOM will pay additional Rs 10,000 crore of its debt, out of the proceeds of sales and commercial development of DAKC (Dhirubhai Ambani Knowledge City) and other prime real estate assets across 8-metros. The new RCOM will have sustainable and profitable B2B - non mobile business," it added.

It said the company is working closely with SBI Capital Markets Limited, the advisors appointed by the lenders, to run a competitive process in a transparent manner to monetise the spectrum, tower and fiber, MCNs and prime real estate assets.

"The company has valuable spectrum across 800/900/1800/2100 MHz spectrum bands ideally suited for 4G and other evolving technologies. While the company will continue with its 4G focused strategy, it plans to monetise its holding through trading and sharing arrangements," the statement added.

The company will also monetise its extensive tower and fiber portfolio comprising of 43,000 plus towers and over 1,78,000 route kilometre of intercity and intracity fiber, it said.

RCOM's monetisation plan also includes its 248 MCN properties located across the country and prime real estate assets located at New Delhi, Mumbai, Chennai, Hyderabad and Kolkata.

Regarding conversion of debt, the statement said: "Debt of Rs 7,000 crore is proposed to be converted into 51 per cent of the company's equity, as per the SDR (strategic debt restructuring) guidelines of the Reserve Bank of India. Shareholders of the company at the annual general meeting held on September 26, 2017 have already approved issuance of equity shares to lenders by conversion of loans."

The statement said the company's transformation journey is focused on viable, sustainable and profitable B2B businesses with a strong domestic and global footprint.

"RCOM's B2B business portfolio comprises Enterprise, Carrier, Internet Data Centre and global submarine cable network in India and overseas across continents. New RCom will rank among the Top 3 data players in India."

It said these B2B businesses are stable, capital light and have sustained and predictable annuity revenues and profits, with immense growth potential amidst low competitive intensity.

"These businesses have no exposure to mobility and consumer business including fiber to home. They generate equal revenues from domestic and overseas operations."

It further said the new RCOM will have sustainable and conservative level of debt of only Rs 6,000 crore. "Cost of debt will be lower due to ability to raise debt funds overseas at low cost."

RCOM is under a standstill period (for interest and principal repayments) till December 2018 and expects to complete the SDR process as per applicable RBI guidelines.