The China Development Bank (CDB) has filed an insolvency case against debt-ridden Reliance Communications (RCom) under the Insolvency and Bankruptcy Code (IBC), becoming first of the telecom firm's lenders to do so, according to a report by Mint.
The company said it has not received any communication related to the said plea, but was surprised by the "untimely and premature" petition filed by the bank, as per media reports. "The company continues to remain engaged with all lenders, including the China Development Bank and is confident and committed to a full resolution with the support of all the lenders", the spokesperson of Reliance Communication said in a statement to the Bombay Stock Exchange.
RCom, which is reeling under a ₹45,000-crore debt, owes about ₹7,500 crore to CDB.
BSE had sought clarification from Reliance Communications after market hours yesterday with respect to news that China Development Bank has filed an insolvency case against it.
China Development Bank lent the debt-ridden firm almost $1.78 billion; it is now in the process of shutting down most of its operations. Its offers of free voice calls and data plans, which continued for months, eroded the revenue and profits of rivals such as RCom.
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Besides CDB, RCom's equipment and technology suppliers like Ericsson India Ltd and Manipal Tech Ltd have already filed bankruptcy petitions against the telecom company. Only once before in recent times has a foreign lender requested an Indian company to be declared insolvent.
RCom's woes are partly a result of a price war triggered by rival Reliance Jio, which is controlled by Anil's elder brother and India's richest man, Mukesh Ambani. The company has built up a 457.5 billion Indian rupees ($7.08 billion) debt pile over the years to fund its growth.
Last month, RCom proposed a debt restructuring plan with "zero write-offs" to its lenders including CDB, saying it would convert about $1.08 billion of its debt into equity and sell some assets including cell towers and real estate. Lenders have not approved this plan yet.
Shares in RCom were trading down 4.5 percent in mid-morning trade after having fallen as much as 9.4 percent earlier.
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