Asia-Pacific Restructuring Advisory Mandates An Acuris Company 10 January 2018 India Reliance BankruptcyCommunications Profile Limited Debtwire.com Debtwire.com AsiaIndia- BankruptcyPacific Restructuring Profile | 10- AdvisoryJan-18 Mandates An Acuris Company Reliance Communications Limited Overview: The National Company Law Tribunal's (NCLT) Mumbai bench has now scheduled for 18 January the oft-adjourned hearing on the bankruptcy CASE DETAILS petition filed against Reliance Communications (RCom) by large trade creditor Ericsson India. Largest creditor China Development Bank (CDB), at a hearing on 5 January, formally pulled its petition after agreeing to enable the Anil Ambani-controlled Indian wireless-communications, data-centre and undersea-cable Petitioner Ericsson India company to proceed with its late-December updated plan to monetise assets, including through the sale of its wireless-related assets to Reliance Jio, a rival controlled by Anil’s elder brother and India’s wealthiest person Mukesh Ambani. In addition, RCom hopes to generate cash by developing its vast Greater Date of petition 13 September 2017 Mumbai real-estate holdings and bringing on a strategic investor to recapitalise the remaining rump company. The plan, which is supposed to reduce RCom’s Past 2 years/ debt by 85% to around INR 60bn (USD 936.3m), is still subject to lender and regulatory approval, according to a company announcement on 26 December. Default period/amount INR 11.56bn (USD 180.63m) Key dates and recent coverage 5-Jan-17: China Development Bank withdraws its bankruptcy petition against RCom, as per Debtwire. Ericsson’s hearing is adjourned to 18 January. Court NCLT’s Mumbai Bench 28-Dec-17: RCom signs a binding definitive agreement to sell its wireless-spectrum, tower, fibre and media-convergence-node assets to Reliance Jio Infocomm. Judge - 27-Dec-17: CDB, RCom’s largest lender, will withdraw its bankruptcy petition, according to the Business Standard. IRP - 26-Dec-17: RCom announces a renewed proposed asset-monetisation plan to reduce its debt by 85% after lenders refrain from exercising their equity- conversion right by the deadline, terminating the semi-regulatory Strategic Debt Restructuring process. RCom Indian counsel Navroz Seervai 18-Dec-17: The admission hearing for bankruptcy petitions filed by trade creditor Ericsson India is adjourned until 5 January, after the admission hearing over Rcom international Paul Hastings LLP the bankruptcy petition by large financial creditor CDB was postponed to the same date three days earlier, as per Debtwire. counsel 15-Dec-17: Onshore lenders continue to dither on the equity swap, weighing provisioning risk against potential battle with CDB, as per Debwire . Ericsson Counsel Ashwin Ankhad & Associates 9-Dec-17: Lenders led by State Bank of India (SBI) have received bids for RCom’s real-estate and telecom assets, as per Business Standard. On 28 November and 1 December, The Economic Times (ET) reported that Reliance Jio, Bharti Airtel and Vodafone were interested in buying RCom spectrum. CDB Counsel Darius Khambata of Trilegal 6-Dec-17: RCom's counsel states during a bankruptcy-admittance hearing that the company is close to a settlement with CDB, Debtwire reports. Export-Import Bank of China (EXIM) and Industrial and Commercial Bank of China (ICBC) plan to support CDB’s bankruptcy petition if needed, as per Reuters. JLF’s Counsel Dina Wadia of J Sagar Associates 5-Dec-17: Fortuna Public Relations Pvt Ltd joins the ranks of trade creditors petitioning for RCom’s bankruptcy, according to Reuters. Kirkland & Eliss (legal), Bondholders advisors 30-Nov-17: RCom claims in an announcement that some onshore and offshore financial creditors will oppose CDB’s insolvency petition. PJT Partners (financial) 28-Nov-17: RCom enters a binding agreement to sell direct-to-home (DTH) unit Reliance Big TV to Pantel Technologies and Veecon Media & Television. 24-Nov-17: CDB files an insolvency petition against RCom and Indian wireless unit Reliance Telecom , according to Debtwire. 21-Nov-17: RCom’s lenders approved the sale of its Chennai and Delhi properties to Brookfield Asset Management for INR 8.01bn (USD 123.3m), as per Mint. DEBTOR SUMMARY 7-Nov-17: RCom’s Global Cloud Exchange, whose cash flows are partially ring-fenced and whose USD 350m, 7% bonds due-2019 bonds are non-recourse to its Promoter Anil Ambani parent, reassures bondholders that they will continue to receive regular coupon payments, as reported by Debtwire. 6-Nov-17: RCom does not pay the coupon on its USD 300m, 6.5% due-2020 notes, citing in an announcement its standstill agreement with bank lenders. Sector Telecommunications 6-Nov-17: Brookfield Infrastructure Partners announced that it called off a deal to buy a 51% stake in RCom’s 43,000 cellular towers for INR 110bn (USD Total Debt 1.7bn), because it was conditional on RCom’s merger of its wireless business with Aircel, which was aborted. INR 490.6bn (as of 31-Mar-17) 2-Nov-17: Trade creditor Tech Mahindra withdraws 9 October insolvency petition against RCom to focus on reaching a settlement, as per Economic Times. 1-Nov-17: RCom completes the acquisition of Sistema Shyam Teleservices Ltd’s Indian wireless business of in exchange for 10% fully diluted stake in RCom. FY17 EBITDA INR 50.8bn 30-Oct-17: RCom presents a zero write-off plan to lenders, proposing to pay down INR 170bn (USD 2.62bn) debt through asset sales and to convert INR 70bn debt into a 51% equity stake. Leverage 9.7x 27-Oct-17: RCom confirms media reports that it will shutter its 2G cellular operations. 2-Oct-17: RCom announces the cancelation of the planned merger of its wireless business with rival Aircel. Doubts about the deal had already been percolating, because, as Debtwire reported on 12 September, there was sustained pushback from international lenders CDB and Standard Chartered Bank, USEFUL LINKS which needed to approve the deal. 13-Sep-17: Ericsson India files an insolvency petition against RCom, Infratel and Telecom. - FY17 Annual Report 2-Jun-17: RCom announces that its lenders have formed a joint lenders forum with the aim of completing a restructuring under the umbrella of the Reserve Bank of India's Strategic Debt Restructuring process, which could require them to swap into a controlling stake by late December. - FY16 Annual Report 18-May-17: Debtwire reports that Rcom is months late on servicing its loans, shedding light for the first time on the company’s dire situation, and causing its long-stable USD 300m, 6.5% bond to finally break below par. Debtwire.com Page 2 AsiaIndia- BankruptcyPacific Restructuring Profile | 10- AdvisoryJan-18 Mandates An Acuris Company Reliance Communications Limited RISE, FALL AND SALVATION Reliance Communications Limited (RCom) is a Maharashtra, India-headquartered wireless-communications, data-centre and undersea-cable company in the process of trying to monetise assets to ward off a bankruptcy process. Once India’s second-largest wireless-communications player in what was expected to be a booming market, the company -- controlled by tycoon Anil Ambani -- is the most high-profile loser in the brutal war for users that reached its apex with the aggressive entry into the space in September 2016 by Reliance Jio Infocomm (RJIO). Under a late-December definitive agreement, Jio will buy RCom’s wireless assets, bringing the business back to its original corporate home – Reliance Industries, the conglomerate controlled by Anil’s big brother and frequent foil, Mukesh Ambani. The sale is part of a revised monetisation plan RCom announced on Boxing Day 2017 that is supposed to reduce its debt to around INR 60bn (USD 936.3m) eventually, compared with INR 490.6bn (USD 7.56bn) as of 31 March 2017. The announcement ended management’s desperate attempts for the past year to save the core wireless business. Following a Debtwire report in May that RCom was months late on servicing its loans, its lenders in early June formed a so-called Joint Lenders Forum with the aim of completing a restructuring by late December under the Reserve Bank of India's Strategic Debt Restructuring (SDR) process. Attempts to merge the flagging wireless business with a rival’s and to sell the communications-tower business collapsed in October and November under the weight of objections from key creditors China Development Bank (CDB) and Standard Chartered Bank. Bankruptcy petitions from CDB and large trade creditor Ericsson India finally forced Anil’s hands. Monetisation plan: RJIO will purchase most of RCom's assets, including 122.4 Mhz of 4G spectrum, around 43,000 towers, around 178,000 kilometres of fibre-optic cable, 248 media-convergence nodes, as per a 28 December announcement that doesn’t state a price. Indian press have reported a price range of INR 200bn-INR 240bn (USD 3.12bn-USD 3.75bn). As part of the 26 December plan, RCom also intends to sell real estate in New Delhi, Chennai, Kolkata, Jigni and Tirupati. It expects the sale of the wireless and property assets will reduce its debt by INR 250bn (USD 3.93bn), according to the 26 December announcement. RCom also plans to monetise its 125 acre IT Park in Navi Mumbai, which houses RCom’s network operations centre. The property, which is held by an SPV, is expected to be further developed after RCom finds a partner and eventually lead to an additional INR 100bn debt reduction. Leftovers: The residual company will mainly comprise RCom’s internet data centres, its landline service catering to Indian enterprises and its submarine cable and data centre unit Global Cloud Xchange (GCX). GCX’s cash flows are partially ring-fenced, as per the terms of its USD 350m secured due-2019 bonds, restricting dividends to RCom if debt-to-EBITDA is above 3.75x or if interest coverage is below 1.75x.