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The stock of Reliance Communications (RCom) tanked more than 7 per cent last week. This follows China Development Bank (CDB) filing an insolvency case against the company with the National Company Law Tribunal. RCom is now reeling under debt of ₹45,000 crore and owes about ₹7,500 crore to CDB which, with interest, is about ₹9,000 crore.
Nearly 31 other lenders of RCom have opposed CDB’s move, as it will force them to take a 50 per cent haircut in their books immediately. It may also harm the company’s efforts to monetise assets to pare debt.
The RCom stock has been on a continuous downtrend, accentuated by its failed merger with Aircel. The poor financial performance has compounded the problems. In the September 2017 quarter, the company posted a loss of ₹2,709 crore compared to profit of ₹62 crore in the year-ago period, while revenue declined 49 per cent y-o-y to ₹2,615 crore.
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