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Reliance capital defaults on interest payments!

Reliance capital defaults on interest payments!

Last updated: 30 Dec, 2020 | 06:23 am

Reliance capital defaults on interest payments!

  • In Sep 2019, CARE Ratings (CARE) had downgraded the company’s entire outstanding debt of ₹15,000 crore to default “CARE D” rating. 
  • Reliance capital said the action taken by the rating agency was completely biased, unwarranted and unjustified as there were no overdues on principal or interest payment to any lender.
  • However, CARE said that the Debenture Trustee for the NCDs had informed CARE that Reliance capital has delayed the payment of coupon on these NCDs by one working day. This constitutes an event of default as per CARE’s default recognition policy.
  • This downgrade had accelerated demands for immediate payment of amounts that were otherwise due and payable in a phased manner over the next 8 years. The company had made it clear that the debt servicing in relation to the accelerated amounts and otherwise will be delayed.
  • The Company is unable to proceed with asset monetization due to prohibition on the Company to dispose of its assets pursuant to Order passed by the Delhi High Court.

The default was on cards and is not something unexpected. ADAG (Anil Dhirubhai Ambani Group) has been struggling for quite a while now. The company had also defaulted on its bank loan interest obligations last month. Recently Reliance Capital had received interest from many global private equity companies for its stake sale. We had covered this in our previous report (Read here).

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