Mumbai: Reliance Communications Ltd`s shares fell sharply on Tuesday after media reports of creditor China Development Bank pursuing insolvency proceedings against the Indian telecoms firm, raising concerns about its ongoing debt overhaul plan.
China Development Bank (CDB) filed an insolvency petition against Reliance Communications (RCom) at India`s National Company Law Tribunal (NCLT) to recover about 114.6 billion rupees ($1.8 billion), reports from ET Now and other media said late on Monday.
A source familiar with the matter told Reuters on Tuesday that CDB had initiated the insolvency proceedings on Friday and that RCom owes the bank upwards of $1.5 billion.
CDB declined immediate comment on the matter. RCom and NCLT could not be reached immediately.
RCom had said in a statement after market hours on Monday that it had not yet been served with any notice of the application from CDB. RCom also said it remains engaged with all lenders including CDB and was confident and committed to a debt restructuring plan with the support of all its lenders.
A case by CDB could complicate RCom`s debt restructuring process as other lenders may take similar steps.
Shares in RCom were trading down 4.5 percent in mid-morning trade after having fallen as much as 9.4 percent earlier.
With a net of debt of 443 billion rupees as of end-March, RCom is the most leveraged listed Indian telecoms company, and along with its rivals has been hit badly by a price war with upstart rival Reliance Jio, which is controlled by India`s richest man, Mukesh Ambani.
RCom, controlled by Ambani`s younger brother, Anil, is attempting to convert roughly 70 billion rupees of its debt to equity via a strategic debt restructuring plan.
As part of the plan, the company is under a debt standstill and hence there are no payments of interest or principal being made to RCom lenders or bondholders.
The local arm of Sweden`s Ericsson is already trying to drag RCom to bankruptcy court and is seeking a total of 11.55 billion rupees from the Indian company and two of its subsidiaries. The Ericsson lawsuit, however, has yet to be admitted by the court.
