RCom’s lenders consortium eyeing SDR route for revival

The debt woes of Anil Ambani led Reliance Group company Reliance Communications have led to investors punishing the telco's scrip in the past few weeks, but ET NOW has learned that the company's top brass and the lender's consortium are now in damage control mode to fast -track the resolution of the company's net debt burden of around Rs 44,000 crore.

"The lenders consortium led by SBI is working on a fresh revival plan for Reliance Communications and is exploring options to pursue the SDR (strategic debt restructuring) route for the account. SDR, which involves conversion of debt into equity will give the lenders greater control and will also help to expedite deal closures," a source familar with ongoing negotiations told ET NOW on the condition of anonymity.

"A joint lenders forum meeting is expected this week and the lenders consortium may finalise advisors for the debt restructuring process," added another source familiar with the revival plans of Reliance Communications.

Deal proceeds from announced transactions with Candian investment giant Brookfield & Aircel are yet to come in even as the management stated on 30th May that it would repay Rs 25,000 crores ( expected to be generated from the two pending deals) prior to September 30th, 2017. The statement followed a downgrade of Reliance Communications corporate family rating and senior secured bond rating by Moody's Investors Service. The debt ridden telco has already been downgraded by two other agencies Care and Icra.

Under the strategic debt restructuring (SDR) mechanism,lenders are allowed to convert debt into equity and take over the management of defaulting companies. In the past, SDR has been mainly invoked in the case of metal, power and infrastructure companies such as Electrosteel Steels, IVRCL, Gammon India, Monnet Ispat and Energy, VISA Steel Ltd, Lanco Teesta Hydro Power Pvt. Ltd, Lanco Infratech Ltd, Jyoti Structures Ltd and Alok Industries Ltd. So far, lenders have been able to find takers only for the businesses of Lanco Infratech and Gammon India.

ET NOW is awaiting responses to email queries mailed to SBI & Reliance Communications on the story.