Reliance Communications Set to Default on Bonds for the First Time

Indian wireless carrier Reliance Communications Ltd. (532712.BY) is headed toward a bond default, after the debt-laden company skipped paying interest on a bond for the first time.

Owned by Anil Ambani, the younger brother of India's richest man, Mukesh Ambani, RCom was due to pay $9.75 million in interest on Monday on $300 million in 5.5-year U.S. dollar bonds issued in May 2015. The bonds carry an annual interest of 6.5%. RCom has ?a seven-day grace period to make the interest payment.

In an announcement late Monday, RCom said the company is under a "standstill period" until December 2018, as part of its debt restructuring program proposed earlier this year. The company also said it is planning asset sales and has a plan to repay its debt.

"Accordingly, for the time being, no payment of interest and/or principal is being made to any lenders and/or bondholders," the company said.

RCom, which faces headwinds in India's crowded telecommunications sector, aims to cut its total debt of 457.5 billion Indian rupees ($7.08 billion) to $923 million through a debt restructuring plan.

Last year, Mukesh Ambani-backed Reliance Jio Infocomm jolted India's telecom industry when the new player offered free call and data plans, further dimming chances of RCom's revival.

Write to Manju Dalal at

(END) Dow Jones Newswires

November 06, 2017 21:44 ET (02:44 GMT)