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RCom shares fall 48% as company proposes to file for bankruptcy

RCOM Board expects substantial unsustainable debt and liabilities to stand extinguished under the NCLT process.

Shares of Anil Ambani led Reliance Communications (RCom) with outstanding debt of ₹42,000 crore fell as much as 48% on Monday morning as the company plans to file for insolvency under the IBC code, being unable to sell its assets to pare debts.

RCom shares on BSE fell down 48% to ₹6 on Monday morning after company announced its intention to file for bankruptcy in the NCLT.

The shares were trading down 37.5% at ₹7.3 at 11 am on Monday, valuing the company at ₹ 2,054 crore or 20 times lower than its outstanding debt to the bankers.

Company’s Debt Resolution Plan under NCLT will include sale of all telecom infrastructure assets and spectrum, strategic monetisation of GCX, IDC & Indian Enterprise Business, and development of 30 million sq ft at the Dhirubhai Ambani Knowledge City (DAKC) complex and sale of other real estate assets, said a company statement on Sunday.

"The Company has been faced with various mostly, untenable issues raised by the Department of Telecommunications. These issues inter alia resulted in numerous legal issues at High Courts, TDSAT and the Hon’ble Supreme Court, which frustrated the existing plan and can now be addressed/resolved under the NCLT process," said a RCom spokesman.

The challenges raised by minority lenders can be now be overcome through the NCLT’s 66% majority rule, against the 100% approvals rule outside NCLT.

RCOM Board expects substantial unsustainable debt and liabilities to stand extinguished under the NCLT process.

"The RCom Board will actively participate (without voting rights) in the NCLT resolution process, as clarified by a recent judgment of Hon’ble Supreme Court," said the company statement adding that the Board also expects strong support from and requisite approvals of the Creditors’ Committee, Resolution Professionals and NCLT in the interest of all stakeholders.

"The RCom Board therefore sees a fast-track NCLT resolution in 2019, free of all uncertainties and challenges. The Board remains confident on future prospects as a going concern under a new ownership on completion of the NCLT resolution process," the statement added.

Pact with Jio

The company in December 2017 had entered into an agreement with Mukesh Ambani led Reliance Jio to sell its telco assets for ₹25,000 crore. However, it could sell assets worth ₹5000 crore only.

Remaining ₹20,000 crore deal with Reliance Jio fell through as it failed to get DoT approval for the sale of spectrum as Reliance Jio refused to take responsibilities for the past dues of RCom.

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