CDB drops insolvency proceedings against RCom

The New Year has kicked-off with a ray of hope for embattled Reliance ADAG Chairman Anil Ambani. Today, China Development Bank (CDB) changed its mind about taking the debt-ridden Reliance Communications Ltd (RCom) to the National Company Law Tribunal. RCom owed nearly one-fourth of its $7 billion total secured debt to CDB, its biggest foreign lender.

Back in 2011, RCom had raised Rs 6,000 crore ($1.33 billion at that time) syndicated loan from CDB for refinancing spectrum fees. It had also signed an additional agreement for raising Rs 2,700 crore ($600 million then) from CDB for financing imports/domestic expenditure of telecom equipment from Chinese vendors Huawei and ZTE. With a large amount of loan principal and interest payments overdue on this loan, CDB had filed an insolvency petition against RCom last November.

But post Anil Ambani's new debt reduction plan, which included the recent asset sale to Reliance Jio Infocomm Ltd reportedly worth around Rs 240 billion, CDB has been paid off partially and hence withdrew insolvency proceedings. "CDB has already received some payment and is happy with the deal it is being offered," a person familiar with the matter told The Economic Times. The Chinese bank, however, will retain the right to refile the petition should the final settlement get delayed.