Reliance Infra, Reliance Power buy time to resolve debt issues
Reliance Infrastructure Limited and Reliance Power Limited are now in a position to take a breather from their debt issues as their lenders have granted them additional time to resolve their debt-related concerns.
Six lenders of Reliance Power signed the Inter-Creditor Agreement (ICA) on July 6, 2019. In other words, 100 per cent of the company’s lenders have signed the ICA for the resolution of Reliance Power’s debt. As per the ICA, Reliance Power has now achieved standstill for 180 days. Based on the RBI Circular, the Resolution Plan of Reliance Power is to be implemented within 180 days. Furthermore, the power company declared a debt-restructuring deal with the US Exim Bank for its Samalkot project.
Reliance Infra also signed an ICA with all its 16 lenders to address the liquidity crunch which has impaired its ability to repay debt. This has granted the company 180 days to find a suitable solution for its debt crisis.
In response to this news, the shares of Reliance Infra buoyed 12.2 per cent to Rs. 51.60 on the BSE at 14:35 IST. The management reassured all the concerned stakeholders that it will successfully implement its resolution plan before the 180 days are up. The company also hopes to conclude the sale of the Delhi-Agra Toll Road to Cube Highways and Infrastructure III PTE towards the end of August 2019. This single transaction alone will lower the company’s debt by more than 25 per cent to just above Rs. 4,000 crore.
Moreover, Reliance Infra's asset monetisation initiatives have progressed adequately. The company intends to monetise its marquee 7 lakh square feet commercial property called Reliance Centre by means of a long-term lease. The company aims to have zero debt in 2020.
Reliance Anil Dhirubhai Ambani Group (Reliance ADA Group) as a whole is burdened with issues involving other affiliates as well, such as Reliance Communications and Reliance Capital. The former is facing insolvency while the latter is cash-strapped and grappling with a downgrade in credit rating to the lowest level, which indicates that there is a looming possibility of default.
On Friday, the shares of Reliance Infrastructure opened at Rs. 51.25 per share, and hit a high and low of Rs. 53.75 and Rs. 50.20, respectively. At 3:09 pm, the stock was trading at Rs. 50.85, down 0.39 per cent. On the other hand, the shares of Reliance Power opened at Rs. 4.21, and hit a high and low of Rs. 4.34 and Rs. 4.19, respectively. At 3:10 pm, the stock was trading at Rs. 4.20, down 0.24 per cent.