Rcom is the newsmaker!

Rcom is the top gainer on the BSE since the opening bell today morning’ Soaring up almost 25% to Rs.26.66, the stock is firmly in the green. Some 2.5 crore shares have already changed hands.

The company announced yesterday after market closure that it will be exiting the Strategic Debt Restructuring (SDR) plan that too with none of the lenders, including the Chinese banks and EXIM Bank having to suffer any right-offs. So an SDR with no loss to the lenders?  How does Rcom hope to pull this off?

It is same old plan – sell off its wireless business and sell land parcels at Dhirubhai Ambani Knowledge City (DAKC). It plans to form a special purpose vehicle for its real estate assets under which it will develop 20 million square feet space on 125 acre over 10 years. Also no debt will be converted into equity – as per the SDR plan, Rs.7000 crore of debt was to convert into equity.  Its debt currently stands at Rs.45,000 crore and it plans to cut its debt by around Rs.25,000 crore through repayment once it sells its assets and spectrum liabilities.

Thus list of assets on sale to reduce debt:

• 122.4 MHz of 4G Spectrum in the 800/900/1800/2100 MHz bands
• Over 43,000 towers , amongst the Top 3 independent tower holdings in India
• 1,78,000 RKM of fiber with Pan India footprint
• 248 Media Convergence Nodes, covering 5 Million Sq ft, used for hosting telecom infrastructure
• Prime real estate located in New Delhi, Chennai, Kolkata, Jigni and Tirupati

It began plans to sell its wireless operations from Oct this year and hopes to complete the deal before end of FY18.  It states that the residual debt after sale of all proposed assets will be Rs.6000 crore.