MUMBAI: Reliance Communications' (RCom) planned debt restructuring could be complicated by China Development Bank`s (CDB) triggering of insolvency action against the beleaguered Indian telecoms carrier.


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Creditor CDB initiated insolvency proceedings on Friday at India`s National Company Law Tribunal (NCLT), a source familiar with the case told Reuters, adding that CDB is seeking to recover more than $1.5 billion.


RCom, backed by billionaire Anil Ambani, has struggled with its heavy debt load and a string of losses, leading to a partial shutdown of its operations. With net debt of 443 billion rupees ($6.88 billion) at the end of March, the company is the most-leveraged among listed phone carriers in India.


While CDB declined immediate comment, RCom said in a statement after market hours on Monday that it had not yet been served with any notice of an application by CDB.


The company said it remained engaged with all lenders, including CDB, and was confident and committed to a debt restructuring plan.


CDB`s action is the first by one of RCom`s banks but follows two other insolvency petitions filed by non-financial creditors including gearmaker Ericsson and could complicate debt-restructuring talks that include a proposed conversion of 70 billion rupees in loans into RCom equity.


RCom`s creditor banks are already dragging their feet over the debt-for-equity swap because the company`s shares are trading at half the price of the proposed swap.


The banks are scheduled to meet this week to discuss their next move, as well as the CDB insolvency plea, according to a senior banker at one of the Indian lenders.


"If the NCLT admits the plea, then we have no other option but to file our claims," said the banker, who asked to remain anonymous. "If the SDR (strategic debt restructuring) cannot be finalised, then the most likely option is insolvency."


It was not known when the NCLT will hear the CDB application. It has yet to admit the Ericsson petition, which is seeking to recover Rs 11.55 billion.


As part of the debt restructuring, RCom is under a debt standstill arrangement with no payments of interest or principal debt being made to lenders or bondholders.


Shares in RCom closed 3.8 percent down at Rs 12.85. The stock has lost more than 62 percent this year.


RCom`s woes are partly a result of a price war triggered by rival Reliance Jio, which is controlled by India`s richest man, Mukesh Ambani.


RCom, which has pacts to share its towers and radio airwaves with Jio, had pledged to sell the towers division and merge its wireless unit with rival Aircel to cut its debt, but both deals collapsed.