RCom gives up and puts future in hands of India’s company court

01 February 2019 | Alan Burkitt-Gray

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Troubled Indian operator Reliance Communications (RCom) has abandoned efforts to resolve its debt and has put its future in the hands of the country’s main company court.

Though RCom is not saying as much in its statement, issued today, the main function of the National Company Law Tribunal (NCLT) is as a bankruptcy court.

RCom said it had failed over 45 meetings to get agreement by its 40 lenders on a way to escape from its financial problems. 

The RCom statement referred specifically to Global Cloud Xchange (GCX), RCom’s international carrier subsidiary, and that is likely to be one of the group’s assets that are in play.

The company said: “RCom and only two of its subsidiaries, Reliance Telecom and Reliance Infratel, will take appropriate steps shortly to implement the board decision. There will be no impact on the business and operations of other subsidiaries of the company, including inter alia GCX, Reliance IDC, etc.”

GCX executives have continued to present an upbeat attitude to the world, indicating that it has good cash flow and expects good orders for its planned Eagle subsea cable, due to run from Mumbai westwards to the Middle East and the Mediterranean and eastwards to Singapore and Hong Kong.

RCom has been trying to sell its spectrum to Reliance Jio, an unrelated rival, but that deal has been blocked by the government’s Department of Telecommunications.

RCom is controlled by Anil Ambani (pictured), the chairman, whose brother Mukesh Ambani runs Reliance Jio. Ericsson has asked the Indian supreme court to jail Anil Ambani because of non-payment of a personally guaranteed debt. 

RCom’s statement today said: “Despite the passage of over 18 months, lenders have received zero proceeds from the proposed asset monetisation plans, and the overall debt resolution process is yet to make any headway.”

RCom said it would seek a fast-track resolution through the NCLT in Mumbai, which sets a target of 270 days – putting the expected completion date at the end of October.

Meanwhile GCX has a $350 million bond payment that falls due on 1 August 2019 –three months before that target date.

GCX has received two acquisition bids from private equity investors, including one from the owner of HGC Global Communications. Capacity understands that both bids are for $1.1 billion.