India's Reliance Communications (RCom) has been granted a seven-month reprieve from its debt repayment obligations to give it time to complete its proposed merger with Aircel and a planned sale of a stake in its mobile tower operations.
In a media release, RCom said its lenders have agreed to a standstill on debt servicing obligations until December 2017 in response to the advanced stages of negotiations over the two transactions.
The merger with Aircel to create an entity which it has been recently revealed will be named Aircom, as well as a sale of a controlling stake in its tower business to Brookfield Group, are expected to reduce RCom's debt burden by around 60% to around 200 billion rupees ($3.1 billion).
RCom has also agreed to develop sustainable long term plans to pay off the remaining debt. If the transactions are not completed by this time, lenders will be able to convert their debt into shares, the company said.
RCom's proposed merger with Aircel is expected to create India's third largest mobile operator with a subscriber base of around 186 million. RCom will hold a 50% stake of the combined company, with Aircel's parent company - Malaysia's Maxis Communications - owning the remainder.