A consortium of Reliance Communications’ (RCOM) lenders has been in discussions with its resolution professional (RP) Deloitte on the possibility of rebidding for its assets.
The lenders of RCOM, which declared bankruptcy in May 2019, are concerned that the Reserve Bank of India (RBI) may not allow UV Asset Reconstruction Company Limited (UVARCL) to acquire the telco’s spectrum and other assets via a resolution plan.
Earlier in 2020, RCOM’s committee of creditors (CoC) approved the resolution plan that involved UVARCL purchasing all assets under RCOM and Reliance Telecom, as well as a Reliance Jio entity overseeing Reliance Infratel’s towers. The plans were submitted to the National Company Law Tribunal (NCLT) later. While the NCLT has cleared the sale of the towers to Jio, it has not yet cleared the sale of other assets to UVARCL. Jio recently approached the NCLT with new concerns regarding the tower sale, though it has not yet been implemented.
As a result of the delay, the value of the assets, especially the spectrum, is rapidly eroding, further depleting the recovery banks hoped to recoup.
The resolution plan calls for UVARCL to pick up RCOM’s spectrum for Rs 127.6 billion, and the total recovery is expected to be in the range of Rs 200- 230 billion, against claims of Rs 573.82 billion, a roughly 65 per cent haircut to lenders. It will cost nearly Rs 50 billion for Jio to buy the towers
RCOM filed for bankruptcy with debts of Rs 460 billion, with 53 financial creditors, including banks and non-banking financial companies, making claims.