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| Reliance Group's chairman Anil Ambani |
On November 24, China Development Bank (CDB) formally filed an insolvency petition against Reliance Communications at the National Company Law Tribunal in Mumbai.
The company is believed to owe Rs130 billion ($2.01 billion) to Chinese lenders – not just CDB (the lion’s share at Rs114.6 billion/$1.78 billion) but China Eximbank and ICBC. That’s out of total debt understood to be above Rs450 billion ($6.97 billion).
A twist followed. On Thursday, Reliance Communications put out a statement saying that in a meeting of a committee of financial creditors, “a majority of Reliance Communications’ lenders, foreign and Indian, aggregating 31, decided to oppose China Development Bank’s insolvency petition”. The lenders appointed lawyers J Sagar Associates to oppose the petition, the statement said.
At the heart of it all is a restructuring plan for debt-laden Reliance Communications, which domestic lenders approved in principle in June – apparently without the Chinese lenders getting a say. The plan assumed a merger between Reliance’s wireless business and Aircel, and the sale of its mobile tower business to Brookfield Asset Management.
Both of those deals subsequently fell through, at which point it appears the Chinese lenders changed tack and started looking at insolvency.
