The latest statement from the telecom operator comes as a way of reassuring investors and lenders that it is serious about paying back the tens of thousands of crores of rupees it owes to banks and bondholders, even after it demerges its wireless operations into a new company.
RCom needs the permission of its lenders for the demerger and the subsequent merger of its wireless operations into Aircel Cellular’s wireless operations.
The company has been stating verbally that it intends to pay Rs 25,000 cr to its lenders at the closing of the merger, but the latest statement indicates that it has given a formal communication to this effect.
“Post signing of binding documents for the Aircel and Brookfield transactions, RCOM has formally advised all its lenders that it will be making repayment of an aggregate amount of Rs 25,000 crore from the proceeds of these two transactions, on or before 30th September 2017,” the Anil Ambani company said.
“The said amount will cover not only all scheduled repayments, but also include substantial pre-payments to all lenders on a pro-rata basis.”
The company absolutely needs the merger to go through to remain viable in a harsh telecom environment where prices have crashed by over 50% in a year, and must get lenders’ permission for the same. The company had expected to complete its mergers with MTS and Aircel by now, but unexpected complications, including conditions stipulated by the Department of Telecom, delayed the process.
“RCOM is presently engaged in discussions with its lenders to obtain their requisite consents for the two transactions and to refinance scheduled instalments falling due in the interim period up to 30th September, 2017, to facilitate expeditious closing of both transactions in the best interests of all stakeholders,”the company added in today’s statement.
“Based on the large number of approvals already received for the two transactions and continuing good progress for the balance, RCOM expects to meet its all debt repayment obligations in line with these plans, and substantially reduce its overall debt.”
The company’s shares have fallen by about 20% since yesterday after word spread on the Street that it was having trouble servicing its debt.