By Manju Dalal
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.
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