Bankruptcy jeopardises RCom's US$3.7b deal; shares plummet

Mumbai

SHARES and bonds of Reliance Communications Ltd tumbled after an Indian tribunal ordered that the wireless carrier be placed in insolvency proceedings, jeopardising its proposed US$3.7 billion asset sale to Reliance Jio Infocomm Ltd.

Shares of RCom, as the company is known, dropped as much as 21 per cent on Wednesday in Mumbai to a record low, while its 2020 dollar bonds plummeted the most in more than seven months.

The Mumbai bench of the National Company Law Tribunal on Tuesday accepted a petition from the Indian unit of network equipment maker Ericsson AB, which is seeking to recover 11.6 billion rupees (S$229 million) in unpaid dues from the telecommunications company controlled by billionaire Anil Ambani.

The court order sets back RCom's planned sale of airwaves, towers and fibre assets to Reliance Jio. RCom can appeal the verdict with a tribunal in New Delhi. BLOOMBERG