“Noteholders holding in aggregate 44% of the principal amount of outstanding Notes were present or represented at the Adjourned Meeting, with 81% of the votes being cast in favour of the Approved Resolutions.
“Accordingly, the Company is pleased to announce that the Approved Resolutions have been incorporated into a supplemental trust deed modifying the Trust Deed dated 6 May 2015,” the Anil Ambani company said.
The assets covered by the resolution are wireless, spectrum, tower, fiber and media convergence node assets.
RCom said it had voluntarily withdrawn a proposal for a reduction in the coupon rate (interest rate) on the bonds and an extension of the maturity period.
“For the avoidance of doubt, the Approved Resolutions do not amend payment terms on the Notes with the exception of certain modifications to interest payable in the period from the date of the First Partial Redemption to the date of the Third Partial Redemption.”
RCom said the asset monetization plan, comprising the sale of its spectrum, tower, fibre, telecommunications infrastructure and select real estate assets is required to close by 31 March 2018, subject to obtaining certain lender consents and regulatory approvals.
However, as of now, the asset sale program has been stayed by the National Company Law Tribunal. RCom has approached the Supreme Court for urgent relief in the matter.
Once the asset sale is completed, the money will be divided among creditors in proportion to their share of the overall debt, the telecom provider said.
“As currently contemplated, the Group’s secured creditors (including its bank lenders and the Noteholders) are expected to be repaid or redeemed, as applicable, on a pro rata basis, from the net proceeds of the asset monetization plan,” it said.
This would, however, be subject to agreed hold-backs relating to ongoing discussions among a group of lenders representing 3% of the company’s financial indebtedness who are claiming priority payments from a particular asset sale, it added. It did not specify which asset the lenders were claiming priority over.
Following the completion of the asset monetization plan, the debt and liabilities of the Company will be reduced by approximately Rs 25,000 cr (US$3,852 million), it added.
The asset sale is part of an overall restructuring plan, which will involve zero write-off for secured lenders and bondholders.
In other words, the company will continue to owe some money to its lenders and bondholders after paying them the proceeds of the asset sale.
As part of the restructuring and in addition to the asset sale, RCom is forming a special purpose vehicle holding 125 acres of prime real estate at Dhirubhai Ambani Knowledge City, Navi Mumbai with approximately 20 million square feet of development potential.
This vehicle will assume non-recourse long-term debt financing of up to Rs 7,000 cr (US$1,079 million), it added.
The third component of the restructuring will be to sell a stake in RCom.
“The company is also in discussions with a global strategic partner for a further debt reduction which will occur upon a stake sale process that is already underway,” it said.
Till the stake sale is completed, said RCom, it is exploring the possibility of taking bridge loans.
“To bridge the successful completion of the stake sale, the company is considering two instruments that would have a de minimis interest rate. The majority of said instruments would have a long-dated maturity and be repaid upon the completion of various milestones, including the ongoing stake sale; whereas the remaining instruments would include a conversion feature within a shorter stipulated timeframe,” it said.
The Company’s final residual financial debt is expected to be up to 7,000 cr (US$1,079 million) upon the completion of all transactions, it said.
The terms of the reinstated bank lenders’ debt in the company is expected to include a maturity extension and an interest rate between 6 to 10%, it said.
The terms of debt assumed by Dhirubhai Ambani Knowledge City, Navi Mumbai is expected to include a maturity extension and an interest rate between 2 to 5%.
Both facilities are anticipated to have a back-ended amortization profile, it said.
“The anticipated restructuring envisages creating a new holding company between RCOM and its subsidiaries and demerging the India Enterprise business from the Company into a new subsidiary under the newly created holding company. The combination of the above transactions will lead to a 85% reduction in the Group’s total debt and liabilities,” it said.