Anil Ambani’s troubles don’t seem to be getting over anytime soon. Yet another firm from his stable has filed for bankruptcy after missing a bond payment. GCX Ltd is the company and is a subsidiary of Reliance Communications Limited, which itself is struggling to get out of a debt crisis. GCX Ltd owns private undersea cable system that is considered the largest in the world.
The company had borrowed funds against 7% bonds, which matured on August 1 and GCX has not been able to pay the funds to redeem the bonds. The total amount involved is $350 million.
A 7% bond is a fixed rate bond, which is a type of bond that pays the same (fixed) amount of interest for its entire term.
The news on GCX Ltd filing for bankruptcy has come out of a court filing in a US court in Delaware, under Chapter 11. The company had earlier stated that it had come to an understanding with the bond holders to wait for more time to make the payments. The current court filing indicates GCX has worked out a plan to partly convert the debt into equity while searching for a suitable buyer for the business. It says 76% holders of the bonds have agreed to this plan.
Reliance Naval & Engineering Ltd is another group company that is struggling to manage a liquidity crisis on one hand due to lack of orders and the pressure to service old debts on the other. Restructuring of debts is not that easy these days as it used to be earlier.
Anil Ambani split from his elder brother Mukesh after a family feud following the demise of their father and founder of the Reliance Group, Dhirubhai Ambani. The communications business came into Anil’s basket. He then ventured into areas like infrastructure, power and defence equipment etc. In the few years since then his companies have piled up debts of over Rs 40,000 crore.
His Reliance Group had drawn out plans to sell its assets in order to raise an amount of around Rs 217 billion ($3.1 billion). These could consist of some of the infrastructure projects and radio stations etc.