So far most banks have not converted the account as a non-performing asset and held it as a special mention account
With Reliance Communications deciding to pull down the shutters on its 2G mobile operations, bankers are worried that they will have limited opportunity to recover their Rs 45,733 crore debt exposure to the company.
"Bankers are planning to call the joint lenders' forum (JLF) shortly to decide on the account. The company is expected to submit a repayment resolution shortly where it will detail how it plans to monetise the real estate, tower business and also spectrum to repay the banks," said a banker who is part of the consortium of lenders.
So far most banks have not converted the account as a non-performing asset and held it as a special mention account. Bankers fear that RBI may ask banks to classify the account as an NPA.
Banks will have to depend on RCom's sale of assets such as tower business and spectrum to get their debt repaid but there are question marks raised by potential buyers on valuations. The disposal of its prime properties will be easier but the total value will be far less than the size of the debt.
Revati Kasture, senior director with Care Ratings, said, "The company intends to sell its real estate business, tower business and the spectrum."
For the spectrum, Anil's elder brother Mukesh Ambani's Reliance Jio may be a buyer in some markets but again the amount would be marginal. Incidentally, Jio shares spectrum in the 800 MHz band from RCom. It may now need to buy out that spectrum.
"Spectrum sale wouldn't bring in any big amount. The Tatas, after all, gave it for free to Bharti Airtel," an analyst who tracks the telecom sector said. The enterprise business would fetch $700-800 million in the best case scenario, he added.
RCom's talks with Brookefield for the sale of its tower business for Rs 11,000 crore could not conclude. The analyst said the value of the tower business could slide as it is based on tenants.
RCom had bought time until December 2017 for a strategic restructuring plan to service its loan.
However, the company's cash and cash equivalents have been eroding for the last three financial years. The company had Rs 1,319 crore of cash in its books at the end of March. Of its total gross debt of Rs 45,733 crore, Rs 20,141 crore are foreign-currency loans and the rest are rupee-denominated.
State Bank of India Ltd has the largest exposure at Rs 2,375 crore while Punjab National Bank has Rs 1,350 crore, IDBI Bank Rs 1,230 crore and Bank of Baroda Rs 1,000 crore. Other lenders to the company include YES Bank, Standard Chartered Bank, HDFC Bank, IFCI and Deutsche Bank.
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Banks will have to depend on RCom's sale of assets such as tower business and spectrum to get their debt repaid but there are question marks raised by potential buyers on valuations. The disposal of its prime properties will be easier but the total value will be far less than the size of the debt.
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