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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.
