RCom To Exit Debt Recast When Asset Sales Begin, Says UCO Bank
UCO Bank expects sale of at least one or two of RCom’s divisions by March next year.
Reliance Communications Ltd. will move out of the Strategic Debt Restructuring plan only after its stated monetisation process takes a concrete shape, said RK Takkar, managing director at UCO Bank that is among the lenders with exposure to the telecom operator.
Once the Anil Ambani-led company exits the SDR, it will be classified as a non-performing asset, he said. The bank will have to make a 15 percent provision for the debt-ridden account as per the norms for substandard assets.
RCom Chairman Anil Ambani announced plans to pare debt by monetising its wireless business, selling land parcels at the Dhirubhai Ambani Knowledge City and transferring spectrum liabilities. The transactions are expected to close by March, Ambani had said yesterday.
Takkar doesn’t see that happening soon as the sale process of only one of RCom’s divisions is at an advanced stage, while the rest are moving slowly. “Monetisation of at least one or two of RCom’s divisions should happen by March.”
Yet, Takkar is hopeful that RCom’s long-due resolution will indeed take place. Finding the “right bidder” at the “right place” would ensure that the resolution plan is on track, he said, adding that an evaluation committee is overseeing the bids coming for the telecom operator’s assets.
UCO Bank’s exposure to RCom stands at around Rs 750 crore. With the RCom experience gone awry and ongoing stress in the telecom sector, Takkar expects banking exposure to the sector to fall considerably unless they have to finance new bidders.
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