India’s Reliance Communications’ 6½% noteholders approve asset sale

By Caroline Salls

Pittsburgh, March 21 – Reliance Communications Ltd. announced Wednesday that the holders of its $300 million of 6½% senior secured notes due 2020 approved the sale of assets to Reliance Jio Infocomm Ltd. and monetization of other real estate assets at a meeting held Tuesday.

According to a news release, the bondholders also approved release of their security on the company’s assets and agreed to accept partial prepayment of their outstanding bonds.

Reliance said the sale resolutions approved by the noteholders include modification of notes conditions related to restricted subsidiaries and release of collateral, consent to the retirement of Standard Chartered as the current note trustee and approval of the appointment of Madison Pacific Trust Ltd. as replacement trustee and the mandatory partial redemption of notes at par on three separate payment dates with proceeds stemming from the Reliance Jio Sale and monetization of other real estate assets.

As previously reported, Reliance signed definitive binding agreements with Reliance Jio in December for the sale of the group’s wireless, spectrum, tower, fiber and media convergence node assets.

The noteholders’ meeting was originally held on March 6, but was adjourned to March 20 because no quorum was achieved at the first meeting.

On March 12, Reliance notified noteholders that it had withdrawn a resolution related to the adjustment of payment terms on the notes, including a reduction in coupon rate and an extension of maturity.

Trust deed changes

In conjunction with the approved resolutions, the company said further modifications have been reflected in a first supplemental trust deed, which provide additional protections.

Under these modifications, the release of any collateral under the notes will be conditional upon receipt of 90% of the consideration payable on that collateral in the Reliance Jio sale.

Milestones related to the redemption of the notes with the proceeds of the sale include a requirement that a first partial redemption occur no later than June 15, a second partial redemption no later than seven business days from the grant of a Spectrum Contiguity matter relief and June 30 and the third partial redemption to occur no later than seven business days following an escrow holdback date.

A meeting with noteholder advisers to discuss the terms of the restructuring of the notes must occur on or before April 15, a restructuring support agreement must be entered on or before June 30, and the restructuring of the notes must be completed on or before Aug. 31.

Support agreement

In exchange for obtaining the requisite noteholder support required to pass the resolutions, the company entered into a resolution support deed with an informal committee of holders of roughly 19% of the principal amount of the notes.

Reliance said the support deed provides additional undertakings and protections to noteholders regarding broader asset monetization and debt resolution plans, including acknowledging that interest is still owed on the notes and that the interest will be included in the consideration for a restructuring of the notes, ensuring that the noteholders are treated no less favorably than any other secured creditor, providing the committee and its advisers access to all information shared with other creditors and paying a cash fee equivalent to 1% of the principal amount outstanding under the notes to the committee by June 30 from the second redemption payment amount.

The group’s asset monetization plan is required to close by March 31, subject to obtaining lender consents and regulatory approvals.

The group’s secured creditors are currently expected to be repaid or redeemed from the net proceeds of the asset monetization plan, subject to agreed holdbacks.

Following the completion of the asset monetization plan, the debt and liabilities of the company will be reduced by $3.85 billion, the release said.

A special purpose vehicle holding real estate at Dhirubhai Ambani Knowledge City, Navi Mumbai, is expected to assume non-recourse long-term debt financing of up to $1.08 billion, and Reliance said it is in discussions with a global strategic partner for a further reduction in debt.

To bridge the completion of a stake sale, the company said it is considering two instruments that would have a de minimis interest rate. Reliance said the majority of those instruments would have a long-dated maturity and be repaid upon the completion of various milestones, whereas the remaining instruments would include a conversion feature within a shorter stipulated timeframe.

Debt projections

The company’s final residual financial debt is expected to be up $1.08 billion upon completion of all transactions.

Reliance said the terms of the reinstated bank lenders’ debt in the company is expected to include a maturity extension and an interest rate between 6% and 10%. The debt assumed by Dhirubhai Ambani Knowledge City, Navi Mumbai is expected to include a maturity extension and an interest rate between 2% to 5%.

In addition, the company said the restructuring calls for the creation of a new holding company and demerging the India Enterprise business into a new subsidiary under the newly created holding company.

The combination of those transactions will lead to an 85% reduction in the group’s total debt and liabilities, according to the release.

Between 2018 and 2022, the continuing business is expected to generate total revenues of $832 million and $1.05 billion per year and EBITDA of between $173 million and $231 million.

Reliance is a Navi Mumbai, India-based telecommunications company.

© 2015 Prospect News.
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