26 February 2019: Shares of Reliance Communications fell 8.1% on Monday after Axis Trustee Services, a wholly- owned subsidiary of Axis Bank, said Anil Ambani’s Reliance Group pledged more shares of the telecom company with it.
The Reliance Group — which had accused L&T Finance and Edelweiss Group of invoking pledged shares of its companies earlier this month, causing a sharp value erosion in their shares — further pledged 8.15 crore shares, or a 2.95% stake, in RCom with Axis Trustee, according to a regulatory filing. Previously the group had pledged 17.25 crore, or 6.24%, of the company’s shares with Axis Trustee. It pledged extra shares to make up for the fall in the value of shares given as security against loans.
All Reliance Group companies except for Reliance Nippon Life are trading 15-58% lower since February 1. While Reliance Power shares declined 58% since the beginning of the month, Reliance Infrastructure and RCom have both lost 50%. On Monday, shares of RCom closed at ₹6.01 on the Bombay Stock Exchange.
The trigger for the slump was RCom’s February 1 statement that it would file for bankruptcy as it had been unable to sell assets to repay debt over the past year and a half. The company has debt of about ₹42,000 crore.
Last week, the Supreme Court held RCom chairman Anil Ambani in contempt for not paying ₹550 crore of arrears to equipment supplier Ericsson, after agreeing to do so in court. It threatened to send him to jail for three months if the company didn’t make the payment within four weeks.