RCom Merger Termination May Be Good News for Bondholders: Lucror

The collapse of plans by Reliance Communications to merge its wireless business with Aircel may be “positive” as RCom bondholders can expect a slightly higher recovery value because its wireless assets will stay, according to a Lucror note.

* The merger, if successful, would have put bondholders in a subordinated position, analyst Trung Nguyen wrote in the note

* RCom’s $300m of 2020 bonds were trading at 53 cents on Friday, according to data compiled by Bloomberg. They have slumped from ~101 in mid-May

** NOTE: Its credit rating was cut to ‘restricted default’ by Fitch Ratings in June after the co.’s lenders agreed to a seven- month moratorium on the debt payments

* RCom and Aircel were due to complete the transaction this year to create what would have been India’s fourth-largest carrier

** “Legal and regulatory uncertainties, and various interventions by vested interests, have caused inordinate delays in receipt of relevant approvals for the proposed transaction,” along with intense competition, have affected industry dynamics, it said in an exchange filing on Sunday

* RCom said in a separate release it will consider “alternate plans” to cut debt, such as monetizing airwaves and land

October 2, 2017, 03:08:06 GMT

By Finbarr Flynn; Edited by Neha D'silva and Beth Thomas